Petras lula bad

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Whither Lula's Brazil?Neoliberalism and ‘ThirdWay’ IdeologyJames Petras Professor Emeritus in Sociology a

& Henry Veltmeyer Professor of Sociology andInternational Development ba Binghamton University , New York, USAb St Mary's University , Halifax, Nova Scotia,CanadaPublished online: 05 Aug 2006.

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Whither Lula’s Brazil? Neoliberalism and ‘Third Way’ Ideology

JAMES PETRAS and HENRY VELTMEYER

This article critically examines the strategy and policies ofPresident Luiz Inacio ‘Lula’ da Silva’s regime in Brazil. Acombination of economic liberalization, political‘redemocratization’, and ‘Third Way’ ideology, his theoreticalframework serves to justify a market-led and imperial-centredmodel of capital accumulation. Lula’s embrace of the free market-IMF structural adjustment policies has led to the evisceration ofagrarian reform policies, a decline in employment and real wages,the slashing of pension benefits and negative per capita economicgrowth – the worst socio-economic performance of any civilianregime since the military dictatorship. Agrarian policy at thecentre of this model consists for the most part of the jailing (orworse) of rural activists, and the promotion of the agribusinesssector as part of the export strategy.

‘We need US leadership for many things we need to do in this world’ –Brazilian Foreign Minister Celso Amorin, 16 March 2003.

‘We are going to war’ – US President George W. Bush, 17 March 2003.

INTRODUCTION

Those engaged in the study of progressive political transformation in LatinAmerica, its possibilities and obstacles, are confronted by two striking andcontrasting images of leftist politicians in power. The first is of the Chileanpresident, Salvador Allende, in Santiago on 11 September 1973,surrounded by armed bodyguards and looking defiantly skywards, as the

James Petras is Professor Emeritus in Sociology, Binghamton University, New York, USA, andHenry Veltmeyer is Professor of Sociology and International Development, St Mary’s University,Halifax, Nova Scotia, Canada.

The Journal of Peasant Studies, Vol.31, No.1, October 2003, pp.1–44ISSN 0306-6150DOI: 10.1080/0306615031000169116 © 2003 Taylor & Francis Ltd.

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US-aided/instigated military coup unfolded.1 The second is of anotherembattled Latin American president some 30 years later, Luiz Inacio ‘Lula’da Silva, sitting down with other besuited (and centre-right) politicians invery comfortable surroundings at a conference held in London during July2003 to celebrate the ‘Third Way’.2 In an important sense, these two verydifferent images symbolize and accurately encapsulate the dilemma ofleftist politics in the new millennium: whether or not a left-in-poweractually is ‘in power’, and – if not – what then is the point of a left being‘in power’.3

The lesson – about the capture and retention of political power – is bothinescapable and salutary. Throughout the latter part of the twentieth century,much of the debate on the left concerned the different routes to politicalpower, and their respective efficacy. On the one hand, advocates of a non-parliamentary road to Latin American socialism argued for the necessity ofarmed struggle (either in the countryside or in the city) with the object ofcapturing state power.4 Advocates of a parliamentary road to Latin Americansocialism, by contrast, eschewed armed struggle, and emphasized insteadthe necessity of complying with the existing formal electoral/constitutionalprocedures of bourgeois democracy.5 In retrospect, it is clear that the moreimportant political distinction is not that between a non-parliamentary anda parliamentary road to socialism, as is frequently claimed in debates on theleft, but rather a willingness both to uphold socialist beliefs and – ifnecessary – defend democratic socialism, in whatever manner state powerhas been achieved.

The election of Lula in 2002 raised great expectations among those onthe centre-left.6 For most of the latter, his election heralded a new epoch ofprogressive changes which, while not revolutionary, defined the ‘end ofneo-liberalism’.7 Noted progressive religious figures, like Leonardo Boff,had earlier announced that any future election of Lula would signalimminent ‘change’ that would challenge US hegemony and lead to greaterpopular participation.8 Frei Betto, a close associate of Lula, launched avitriolic attack on critics who questioned some of Lula’s appointments,citing his popular roots as a former metalworker and union leader a quarterof a century earlier.9 Olivo Dutra and Tarso Genero, left-wing members ofthe Workers Party (Partido Trabalhista, or PT) appointed to minorministerial positions in Lula’s cabinet, called for the ‘disciplining’ (=expulsion or silencing) of dissident PT Senator Heloisa who objected to thePT’s support for right-wing Senator Jose Sarney as President of the Senate.European, US and Latin American progressives and leftists, together withtheir movements, NGOs, parties and journals, all joined the celebration ofthe Lula Presidency, his ‘progressive agenda’, and his ‘leadership in thefight against neoliberalism and globalization’.10 While over 100,000 at the

2 THE JOURNAL OF PEASANT STUDIES

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World Social Forum in January 2003 at Porto Alegre cheered Lula as a heroof the Left and precursor of a new wave of leftist regimes (along withPresident Lucio Gutierrez of Ecuador and President Hugo Chavez ofVenezuela), some of Lula’s intellectual supporters (for example, EmirSader) attempted to dissuade Lula from going to Davos to plead his case forforeign investment by the world’s most rapacious speculators and richestinvestors.

Ominously, other voices – much less progressive, and with a radicallydifferent political and economic agenda – were lining up to hail Lula as‘their man’. In addition to the great majority of the left intellectuals, NGOsand politicians who aggressively and unquestioningly support Lula as a newprogressive force, therefore, the Brazilian and foreign financial media,international financial institutions (IMF, World Bank, Wall Street, City ofLondon) and prominent right-wing political leaders (the British PrimeMinister Tony Blair and US President Bush) also praised Lula as astatesman and ‘pragmatic leader’.11 In other words, big business, bankersand right-wing political leaders see Lula as an ally in defence of theirinterests against the left and the mass popular movements. The centralquestion thus becomes: now that Lula is president of Brazil, whose politicaland economic interests does he actually represent, and why? Accordingly,this article will attempt to answer this question, by analyzing and evaluatingthe expectations of the left and capitalist perceptions in light of political andeconomic realities.

The object of the analysis which follows is to show how what is andwhat is not happening in the agrarian sector of Brazil, is consistent with(and, indeed, part of) a much broader socio-economic project, one wherebyLula is extending and consolidating the neoliberal agenda of his predecessor– Fernando Henrique Cardoso.12 The first section investigates the politicaltransformation of Lula, and outlines why the celebration by him of the‘Third Way’ is not anomalous, either theoretically or politically, but muchrather accurately reflects his current approach. The second part of the articleexamines the changed nature of the party which supported Lula’s rise topower, in terms of the contrast between its historical dynamic/membershipand grassroots control, and the current – very different – leadership controland party democracy. The third section looks at the policies inaugurated byLula once in power, with particular reference to his agrarian reformprogramme. Also considered is the way he has managed to silence or co-optgrassroots opposition to these policies. The conclusion considers theprospects for a regenerated leftwing opposition to Lula’s project ofeconomic liberalization.

3NEOLIBERALISM AND THE ‘THIRD WAY’

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LULA AND THE ‘THIRD WAY’

The degree to which policy initiatives adhering to – and, indeed, framed in– unambiguously neoliberal language has generated unthinking support onthe part of those who these days pass for opponents of global capitalism isevident from, for example, the uncritical endorsement of Lula and the PT byNaomi Klein.13 At the time of the World Social Forum in Porto Alegre,therefore, she endorsed the participatory budget scheme put forward by thePT simply because it amounted to a process of decentralization that in herview was the ‘other’ of globalization. Her enthusiasm, and also her naivety,is evident from the following:

much of the appeal of the [World Social Forum] is that its host city,Porto Alegre, has come to represent a challenge to [globalization]. Thecity is part of a growing political movement in Brazil that issystematically delegating power back to people at the municipal levelrather than hoarding it at the national and international levels. Theparty that has been the architect of this decentralization in Brazil is theWorkers Party (the PT)… Many PT cities have adopted the‘participatory budget’, a system that allows direct citizenparticipation in the allocation of scarce resources. …. In PortoAlegre, this devolution of power has brought results that are themirror opposite of global economic trends. (emphasis added)

This, she continues in much the same vein, underlines the fact that under thePT ‘democratic participation increases every year’. Her conclusion issymptomatic:

[the participatory budget] is part of a pattern of a rejection of whatPortuguese political scientist Boaventura dos Santos calls ‘low-intensitydemocracy’ in favour of higher-impact democracies, from independentmedia activists creating new models of participatory media to landlessfarmers occupying and planting unused land all over Brazil… Maybechange isn’t really about what is said and done in the centres, it’s aboutthe seams, the in-between spaces with their hidden strength.

About this suggested ‘democratic participation’ involving self-help by thoseat the rural grassroots, two rather obvious shortcomings can be mentioned.

First, ‘higher-impact democracies’ at the grassroots face seriousdifficulties where, as in Klein’s schema, no attempt is made to address theclass instrumentality of the state. By fetishizing ‘redemocratization’ in thismanner, therefore, Klein – like so many other populists – fails to problematizeeither class or state power, in effect leaving the state and the capitalist classintact, which is precisely what neoliberals advocate.14 What Klein (and others)


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forget, therefore, is that neoliberals too are in favour of decentralization, notleast because it disperses mass opposition to their policies and thusorganizationally and politically disempowers poor peasants and workers.15

And second, operating within the capitalist system also has economic effects.Hence there is no attempt by Klein (and others) to challenge the concept‘scarce resources’ – itself a central theoretical emplacement of marginalisteconomic analysis. In contrast, Marxists would draw attention to the fact thatresources are only scarce in the first place because members of a capitalistclass own them. Unless this latter fact is itself confronted, any solutionproposed (no matter how well-intentioned) is bound to fail. Withoutexpropriation of existing property, therefore, all that poor peasants andlandless workers actually participate in is their own continuing poverty.16 Byitself, grassroots ‘redemocratization’ is not – and cannot be – a solution tocurrent impoverishment and underdevelopment in Brazil.

The main problem lies with the seemingly progressive – but in realityambiguous, not to say theoretically slippery – concept, ‘redemocratization’.17

The latter is central to many recent and current attempts by liberal (andneoliberal) theorists to reinvent/reassert the validity of a ‘kinder/caring’capitalism in the aftermath both of the military regimes that plagued LatinAmerica throughout the 1970s and 1980s, and of the ending of socialism inthe USSR and Eastern Europe in 1989.18 One influential reincarnation – ofwhich Lula himself is an adherent – takes the form of what is termed the‘Third Way’, an approach claimed by its exponents to transcend both leftistand rightist politics.19 An advocate of ‘Third Way’ politics in Brazil [Bresser-Pereira, 2001] not only categorizes this analytical framework – incorrectly –as a ‘new left’ and a form of ‘modern social democracy’ but also reveals(inadvertently, one suspects) the extent of its complicity with the neoliberalproject. Accordingly, he endorses both its pro-market, pro-choice, pro-individual approach, plus its acceptability to ‘progressive capitalists’ inBrazil, and also the opposition of the ‘Third Way’ to Marxist politics (= ‘theold left’), further taxation, the state, and bureaucratization.20 In short, apolitical discourse/programme that is indistinguishable from neoliberalism.21

Unger Marches along the Third Way

Despite, or rather because of, its profoundly disempowering implicationsfor the rural (and, indeed, urban) grassroots, in Brazil and elsewhere, the‘Third Way’ is clothed in the language of plebeian advantage: specifically,the claim that its programme corresponds to a process of‘redemocratization’.22 Hence the stated intention of ‘democratizingdemocracy’, a political objective that involves neither transforming existingproperty relations nor the redistribution of income/power, but rather theoffer of palliatives to offset the continuing effects of capitalism.23


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Another variant of the ‘Third Way’ is ‘communitarianism’, one of whosemost influential exponents is Roberto Mangabeira Unger [1987a; 1996;1998], a Brazilian academic based in the United States.24 His ‘market-friendly’ alternative to socialism is encapsulated in the slogan ‘democratizethe market, deepen democracy’, and – like the ‘Third Way’ approach –transformation is limited to institutional change within actually-existingcapitalism. In essence, this amounts to no more than the politicalincorporation (= equality-as-inclusion) of peasants and workers in anotherwise unequal system, or the exercise of hegemony-from-above.25

Consequently, the economic and class structures, or those elements thatreproduce the systemic inequalities/oppression/vulnerabilities to which heobjects, remain intact.26 Like exponents of the ‘Third Way’, Ungerprivileges what might be termed the politics of voluntarism, in his caserecycling earlier theory about the durability of demographically determinedmodels of subsistence-oriented peasant economy.27 As is clear from Unger’s[1987b] analysis of ‘the plasticity of social relationships’ he claims informsthe historical dynamic of peasant economy (= the ‘reversion cycle’), hemaintains that in the past those at the rural grassroots were in effect able tochange social relationships how and when they wanted.28 The corollary isobvious: if this has been done before, why not now?

It comes as no surprise, therefore, to learn that in 2002 Unger declaredhis strong support for the presidential candidacy of Lula.29 Because both the‘Third Way’ and ‘communitarianism’ are pro-market and anti-Marxist/anti-state, each offers nothing more radical than a programme of‘redemocratization’. In essence, this amounts to palliatives that, it isclaimed, will offset the negative economic impact on those at the ruralgrassroots of neoliberalism. Given that in the latter context even this modestattempt at amelioration will be opposed by capitalists, theoreticians such asUnger maintain that such obstacles will dissolve in the face of thewillingness/ability of ‘those below’ to adapt to change, thereby establishingpolitical ‘community’.30 Simply put, for the ‘Third Way’ and‘communitarianism’ the process of ‘redemocratization’ means a capacity ofthose at the rural grassroots – workers and peasants, in other words – to seekand be satisfied with political and ideological empowerment inside not justcapitalism but its neoliberal form.31 This seemingly contradictory objectiveis to be effected without systemic transformation, let alone a ‘destabilizing’transcendence involving revolution.

‘Redemocratization’ as Political Incorporation

Why the conceptually empty term ‘redemocratization’ is so acceptable toconservatives is not difficult to discern. Although it implies a process of‘from below’ empowerment, in reality it involves much rather the opposite:


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a process of ‘from above’ empowerment, albeit projected in terms of anddressed up in the language of grassroots political interests and/or advantage.Political control passed to the urban and rural working classes and peasantsis in reality negated by those such as Lula, populists who campaign and areelected to power on the basis of an ideology promising radicaltransformation. Not the least problematic outcome is that, ideologically, thedisempowerment that ‘redemocratization’ ultimately turns out to benecessarily generates among erstwhile grassroots supporters adisillusion/frustration with all democratic politics. This view, that theruler/ruled distinction is innate and permanent, has two interrelatedconsequences.

First, it seemingly confirms the veracity of pessimistic claims made byconservative theoreticians such as Mosca [1939], Lippmann [1922; 1937;1955] and Burnham [1941], that elites are ‘natural’, an outcome being thatthe existing socio-economic structure cannot be transformed. Perhaps themost influential variant of this argument is that advanced by Mosca. Incontrast to Marx, for whom historically specific classes engaged in struggleand either occupied or departed from the political stage – Mosca insistedthat a ruling class (= political class) perpetuated its dominance by a dualprocess of renewal: expulsion from combined with induction into itsmembership (= exosmosis/endomosis).32 On the one hand, therefore,expelling those elements that – for whatever reason (loss of materialresources, ideologically expendable/redundant) – are no longer necessary toits reproduction. On the other, constantly replenishing itself through therecruitment of what might be termed ‘plebeian talent’, or the incorporationof potentially dangerous grassroots leaders.33 Although the actualcomposition of a ruling class changed, therefore, its rule and powercontinued. Lippmann, who in an important sense provided conservativeswith the reason as to why elites are ‘natural’, neatly complemented thisview. His objection to democracy was based on the argument that themasses were too ill-informed to govern (= ‘a sovereign but incompetentpeople’), a claim that seemingly justifies the exercise of power by a rulingclass, particularly where the latter periodically incorporates grassroots (=plebeian) leaders.34

And second, the grassroots depoliticization that follows this process ofdisempowerment is itself fertile ground for the growth of the political right.The emergence of the latter takes the form of a strong leader who, becausehe claims to be ‘a-political’/’above politics’, is able to persuade a politicallydisillusioned grassroots (including workers and peasants) that he representsthe ‘small man’, on whose behalf he undertakes to rein in the power of theexisting elite. Since this cannot be either accomplished or sustained bydemocratic means, the anti-democratic utterances of the political right are


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imbued with ideological acceptability, and – in the eyes of those at thegrassroots alienated by the incapacity of (bourgeois) democracy to changeanything – its strategy becomes therefore not just compelling but necessary.Significantly, the term used by Mosca – ‘the political class’ – is now onceagain much in vogue amongst journalists and academics, the inferencebeing that historically and contemporaneously there is a category of peoplewho rule ‘naturally’.35 The latter claim fuses with that of Burnham, who inthe early 1940s maintained similarly that the capitalist system, largeenterprises and the state would henceforth all be ‘managed’ byexperts/technicians, thereby conceptually updating Mosca’s ‘political class’as a ‘natural’ ruling class. These ‘managers’ would, like new members of theexisting ruling class, be recruited from below, thereby harnessing plebeiantalent to the survival of capitalism in the manner identified by Mosca.36

Masquerading behind the term ‘redemocratization’, therefore, is just such aprocess of neutralization, since the element of ‘from below’ political controlimplied in the election of Lula is in effect negated by his continuation of theexisting neoliberal project. Although this is obviously not the first time thatsuch a betrayal has occurred, it is for leftist opinion in Brazil and LatinAmerica (and elsewhere) a particular bitter experience, not least because ofthe heightened expectations generated by Lula’s election to the presidency.

THE WORKERS’ PARTY

Most contemporary observers refer to the Workers’ Party as a partycomposed of and thus reflecting the interest of the Brazilian working class,both rural and urban. This perceived correspondence between party,grassroots social composition and political programme derives in turn bothfrom the historical link between on the one hand the PT and socialmovements, and on the other its deep involvement in class and socialstruggles. This was certainly the case when the PT was founded, over twodecades ago. The most significant fact about the PT, however, is itsqualitative transformation over the past quarter of a century. Severalessential changes have taken place in the party: these are its relation to thesocial movements and their struggles; the internal structure of the party andthe composition of the delegates to its Party Congress; and its programmeand political alliances.

Lula and the Workers’ Party

When it was founded, the PT was a party with a strong component of whatare nowadays described as social movements: that is, an heterogeneousmembership that included landless workers, urban favelados (slumdwellers), ecologists, feminists, cultural and artistic groups, progressive


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religious and human rights activists, plus the major new trade unions(metalworkers, teachers, banking and public sector employees).37 Thegrowth in its membership and influence stemmed from its directinvolvement in the struggles conducted by social movements, and in thebeginning the electoral campaigns it undertook largely complemented suchextra-parliamentary struggles. Over time, and with increased electoralsuccesses, however, those within the PT who favoured a parliamentary roadgained control of the party, and slowly redefined its role as basically anelectoral apparatus, giving lip service to the social struggle whileconcentrating its efforts inside the apparatus and institutions of the state,and forming de facto alliances with bourgeois organizations. A left-wingminority within what was increasingly an ‘electoral party’ continued tosupport the grassroots movements, albeit from within official institutions,providing them with legal defence, denouncing state repression, andproviding help and encouragement at mass gatherings. What is clear,however, is that all tendencies of the electoral party – left, centre and right– were no longer engaged in day-to-day mass organizing, except prior toand in connection with election campaigns.

The second important change was in the composition of the party, theparty congresses, and the relationship between party and leader. By the mid-1990s, therefore, the great majority of the party apparatus was made up offull-time functionaries, professionals, lawyers, public employees, universityprofessors and other middle and lower middle class employees. The‘voluntary activists’ from the rural and urban grassroots disappeared and/orwere marginalized, as the PT turned from mass struggles to office-seekingand wheeling and dealing with business groups and a diverse array ofcentre-left to centre-right parties. The last Congress of the PT prior to Lula’selection was overwhelmingly (75%) middle class, mostly functionaries,with a sprinkling of trade union, MST and human rights leaders.

Clearly the PT was no longer a ‘workers’ party’, either in itscomposition, in its delegate Congress, in its relation to grassroots socialmovements (election time apart), or in its style of leadership. Moreover,many of the elected officials of the PT at the municipal and state level wereengaged in the same kind of cross-class alliances with business groups andbourgeois parties, a path that the PT itself would follow in the presidentialcampaign of 2002. In other words, the right turn of the PT at the nationallevel was preceded by a similar pattern at the state and municipal levelduring the decade of the 1990s. Significantly, many of the key party leadersand subsequent advisers to Lula were office holders already implementingeconomic liberalization, even while the national party programme stillspoke of socialism, anti-imperialism and repudiation of the foreign debt. Asthe 2002 elections approached, the national leadership of the PT, with Lula


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leading the way, eliminated all the programmatic references to socialismand anti-imperialism, in line with the practices of the neoliberalofficeholders in the party and with the majority support of the nownumerically dominant middle class party delegates.

(Electoral) Politics and the Conquest of (Presidential) Power

The third fundamental change in the PT concerns the evolution of itsprogramme, a transformation that took place in four stages. During the1980s, the PT stood for a socialist society based on assembly-styledemocracy, linked to the social movements.38 The party called for arepudiation of the foreign debt, the socialization of banking, foreign tradeand national industrialization (with some sectors calling for theexpropriation of large industries and others for worker co-management).Most crucially, its programme included sweeping land redistribution,backed up with state financial, technical and marketing support. Theseradical positions were debated openly and freely by all the tendencies (fromMarxists to social democrats), dissent and/or agreement frequently beingpublished in their own newspapers. Beginning in the late 1980s, however,the PT moved to the right, and by the late 1990s the axis of power hadshifted toward a ‘social-democratic position’ (support for a welfare state)while the Marxist-left continued as a strong minority tendency. The socialdemocrats controlled the increasingly middle class party apparatus, whilethe Marxists organized their opposition from within the same apparatus: few– if any – of the latter turned to mass organization so as to counter a growingweakness in the party machinery.39

Although at a formal level the programme of the PT still retained itsearlier radical demands, in practice most of the newly elected governorsand mayors did not challenge existing property relations. The radical wingof the elected officials in Porto Alegre introduced the notion of a‘participatory budget’, involving neighbourhood committees, but failed tomunicipalize any essential services, including transport. Crucially, noattempt was made by them to stimulate land occupations orencourage/support the demands made by landless workers for an agrarianreform programme. The fact that the participatory budget was based on thefunds allocated by state and municipal regimes, which established theoverall budget priorities, meant that politically even the radical elementswithin the ranks of the PT soon learned to co-exist and cooperate with theestablished banking, industrial and real estate elites. Debate between theminority Marxist and dominant social democratic wings of the PT wasconfined to programmatic language, the differences of practice betweenthem being in fact quite narrow.40

The third phase of the PT, roughly between the end of the 1990s and the


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run-up to the elections, saw a further shift to the right in programmaticterms.41 In the course of this period, therefore, even the rhetorical referencesto Marxism, socialism and foreign debt repudiation disappeared. It was aconjuncture at which the party leadership was in full transition to socialliberalism – combining anti-poverty populist rhetoric with the pursuit ofalliances with neoliberal business, banking and agro-export elites. Duringthe election campaign, Lula repudiated the referendum on free trade policies(ALCA) organized by the MST, sectors of the progressive church and otherleftist groups.42 Instead, the PT called for ‘negotiations’ to improve ACLA.The PT embraced a pact (June 2002) with the IMF and acceded to itsdictates on fiscal austerity, a budget surplus to pay bondholders, reductionsin public spending and respect for all privatized enterprises. The socialdimension of this economic liberalization programme was the declaration infavour of a gradual agrarian reform (of unspecified dimensions), a ‘zeropoverty’ agenda, providing family food subsidies, and land titles for urbansquatters.43

The final phase in the evolution of the PT’s programme begins in 2003,when it becomes in effect a presidential party, and its government embracesan orthodox neoliberal project.44 Despite promises of increased socialspending, the Lula regime has slashed budgets, imposed fiscal austerity,raised interest rates to attract speculative capital and is negotiating with theUnited States to lower Brazilian trade barriers. In other words, for the Lularegime its differences with the United States centre on whether or notWashington adheres to its free-market economic philosophy. Most of theleftists around the world who see the victory of the PT and Lula as theadvent of basic – or at least important – social changes benefiting the urbanand rural poor by redistributing wealth and land, base their views on long-outdated images of political reality. Over the past few years the militantswho built the party through grassroots movements have been replaced by‘neo-Lulistas’, upwardly mobile functionaries, professionals with no historyof class politics, who have joined the party to secure the perks of office andto facilitate business liaisons.45 A small inner circle of campaign advisers,long known for their neoliberal credentials, has played the major role inshaping Lula’s presidential campaign. Of these the most influential wereAntonio Palocci, Jose Dirceu, and Marcos Lisboa.46 What remains of theolder reform social democrats have been shunted to marginal ministries; ifthey dare to question the neo-Lulista hegemony, they are subject to punitivemeasures for ‘violating party discipline’.47

The PT’s programme was a clear continuation of the outgoing PresidentCardoso’s disastrous neoliberal policies and in some cases even anextension and/or intensification of his economic liberalization agenda.48 Inorder to demonstrate their liberal orthodoxy to the bankers and


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industrialists, Lula’s team signed a pact with the IMF only a few weeks afterhis electoral victory. In exchange for securing a US$30 billion loan over afour-year period, Lula agreed to a strict adherence to all the typicalretrograde conditions set forth by the IMF.49 Once in office Lula wentbeyond even these harsh measures.50 The IMF agreement included thetypical recessionary measures maintaining inflationary control bywithholding large injections of fresh capital to stimulate growth,acquiescence in the privatization programme unleashed by outgoingPresident Cardoso and a budget surplus target (beyond what is paid ininterest payments) of 3.75 per cent of gross domestic product, thusguaranteeing in advance that little or no funds would be available for any ofthe promises Lula made about ‘zero poverty’, let alone financingcomprehensive agrarian reform.

Lula’s inner team of Palocci, Dirceu and their economic advisers alsomoved quickly to demonstrate their allegiance to US imperialism.51 To thisend, Lula also publicly criticized Presidents Chavez of Venezuela and FidelCastro of Cuba prior to his inaugural address. His inauguration speech wasa masterpiece of duplicity – a double discourse to set his working classsupporters dancing in the street whilst assuring foreign bankers that hisregime was their regime. Accordingly, the speech referred to ‘changes’,‘new roads’, and the ‘exhaustion of a [neoliberal] model’ which Lula thenqualified by speaking of a ‘gradual and continuous process’ based on‘patience and perseverance.’ He then spoke of ‘zero hunger’ as the priorityof his government. Most significantly, although agrarian reform anddeveloping the internal market were both mentioned, Lula then proceededto criticize protectionism and subsidies and endorse agro-export elites andfree trade. In other words, in terms of agrarian policy he voiced support forthe interests and objectives of poor peasants and rural workers, whilesimultaneously approving measures and/or interests opposed to them. Thiscontradictory agrarian policy was, of course, entirely consistent with hisoverall approach. After having appointed the most rigid neoliberals to everykey economic post, he could not possibly claim in all seriousness to betaking a ‘new road.’ Equally, after signing on to the IMF austerity budgetthere was no way he could finance either new employment measures or apolicy of ‘zero hunger.’52 Similarly, by prioritizing anti-inflationarymeasures designed by and acceptable to the IMF, there was no way Lulacould lower interest rates to promote the internal market. In keeping withthe ‘Third Way’ approach, this double discourse belied a single practice: tocontinue and deepen the model that he denounced as leading to stagnationand hunger. Once in office Lula very early on demonstrated the vacuity ofhis promises regarding social welfare and agrarian reform.

Contrary to the claims made by most of the neo-Lulistas, therefore, the


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PT is currently a party that aspires to represent an alliance between domesticbig industrialists and agribusiness interests and overseas bankers. Itnevertheless hopes to retain the loyalty of labour via ‘social pacts’ based onbusiness/trade union agreements which will allow business to reorganize theworkplace, fire workers to lower costs and to increase part-time and short-term workers, in exchange for which trade union bosses will receivesymbolic and monetary remuneration.53 The appointment of left-wing PTmembers to the Agrarian Reform and Labour Ministries is designed topacify the unions and the MST with symbolic, not substantive,representation. The job of the left PT ministers is both to preach ‘patience’and to make empty but radical speeches at industrial workers’ and landlessworkers’ meetings. All the left-wing ministers are faced with limitedbudgets and a pro-business economic strategy that will undermine anysubstantial reform programmes. They have to plead with the dominantneoliberal economic ministers for any residual financial outlays, anundertaking with few prospects of success. Some leftist ministers mayresign, most will adapt to the liberal orthodoxy and argue for what they willcall ‘new realism’ or ‘possibilism’. In short, the PT as a dynamic movementbased on the support of peasants and workers, whose political interests itrepresents, is dead.54

LULA IN POWER: PUSHING NEOLIBERALISM TO THE LIMITS

What is important in analyzing a political leader is not where he comesfrom, but where he is going; not his reference group in the past, but hispresent and future reference groups. Political observers have been wrong intheir analysis of Lula because they focus on his distant past, his former tradeunion comrades, not his present neoliberal banker, businessmen andimperialist allies. When Lula proposed a social pact between labour,business and the government, purportedly to work for the betterment ofBrazil as a whole, he set up a Social Economic Development Council toformulate policy recommendations. The composition and agenda of theCouncil revealed Lula’s pro-business, anti-working class bias. Of the 82members of the Council, 41 are businessmen and 13 are trade unionists, abetter than three to one proportion favouring the bosses. The purpose is todiscuss tax reform – reduce business taxes, in other words – and socialsecurity reform, decrease payments to workers, pensioners and other statebeneficiaries. When Lula was confronted with the preponderance of thebusiness elite among his inner circle, he roundly defended his pro-industrial/agribusiness bias, embellishing his choices with an apolitical,meritocratic varnish and accusing his critics of nepotism.55 Lulaconveniently forgets that his businessmen’s ‘disinterested talent for thinking


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for the country’ has resulted in the greatest social inequalities in the world.Like his ‘Third Way’ counterparts elsewhere in the world, Lula deliberatelyoverlooks the class interests of the business elite precisely because they arehis strategic allies in the pursuit of a neoliberal project.

Lula’s neoliberal appointees to economically strategic positionsestablished the parameters for the formulation of macro- and micro-economic and social policy. To understand what has transpired since Lulatook office it is essential both to understand the underlying philosophywhich guides his regime – economic liberalization – and to set aside hispopulist rhetoric in the public arena, the object of which is to pacify the ruraland urban poor, the rank-and-file membership of the social movements, anddissident members of the PT. Taken together, the elements structuring theneoliberal philosophical assumptions guiding Lula’s economic policyprovide the basis both for analysis and criticism, and also a background tohis agrarian reform programme (see below). One thing that can be saidabout Lula’s economic team is that its members have lost no time infulfilling their pre-inauguration promises – about the budget, the market,prices, pensions, taxes, wages and employment – made to the internationalfinancial institutions, international bankers and the local industrial elites.Few ex-leftist governments have moved as rapidly and decisively toembrace and implement a right-wing agenda as has the Lula regime.

The operating philosophy of Lula and his PT regime has four keypostulates. First, that Brazil is in a crisis which can only be solved byimplementing austerity policies promoted by the international financialinstitutions in order to secure new flows of loans and foreign investment,identified by Lula as the principal vehicles for development.56 Second, thatBrazil will grow economically only by providing incentives to domestic bigbusiness, agribusiness enterprises and foreign multinationals.57 Theseincentives include lower taxes, reducing labour welfare provisions andstrengthening business positions in labour/management negotiations. Third,that in Brazil the free market, with minimum state intervention, regulationand control is essential for solving the problems of domestic economicgrowth, unemployment and inequality. The priority of Lula’s economicteam is thus to promote Brazilian exports to overseas markets – over andagainst domestic markets – and to pressure the United States and Europe toliberalize their markets.58 And fourth, economic growth in Brazil willeventually result from price stability, foreign capital flows, tight fiscalpolicy and above all strict payment of public and foreign debts; hence theneed to slash government budgets, particularly social budgets, toaccumulate a budget surplus for debt repayments, and to control inflation.Once stability (the ‘bitter medicine’) is achieved, so the argument goes, theBrazilian economy will ‘take off’ into market-driven export growth,


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financing those domestic poverty programmes designed to alleviatehunger.59

In order to meet the conditions laid down by the IMF, and in keepingwith the interests of newly acquired allies among the economic elites, theLula regime slashed the budget by US$3.9 billion.60 Included in the budgetcuts was a reduction in the promised minimum wage from US$69 to US$67per month, to take effect in May 2003, five months after taking office.Given the sharp rise in inflation, this will reduce the minimum below themiserable level of the previous Cardoso regime. Over US$1.4 billion of theUS$3.9 billion cut will come out of the social budget. A closer analysis ofthe budget cuts reveals that reductions will affect food programmes,education, social security, labour, agricultural development, and socialpromotion. Altogether, social cuts amount to 35.4 per cent of the budgetreduction.61 Even Lula’s much publicized pet project Fome Zero (‘zerohunger’) was slashed by US$10 million, leaving a paltry US$492 million tomeet the needs of 40 million malnourished Brazilians. The budget cutsmean the funds budgeted for the hungry amount to US$10 annually, orUS$0.85 a month – a princely sum of 2.5 cents per day. The major reasonfor the social and other budget cuts was to increase the budget surplus tomeet IMF and debt payments, and to this end Lula increased the surplus to4.25 per cent in February 2003. In other words, the budget allocation tomeet debt obligations has expanded from US$17 billion to US$19.4 billion,an increase of nearly 14 per cent. This corresponds to a direct budgetarytransfer, taken from the social funds, of an additional US$2.4 billion fromthe very poorest, the working and middle class to the very rich.62

Lula and his Finance Minister Palocci, a former Trotskyist, and Chief ofStaff José Durceu, a former student leader who trained as a guerrilla fighter,reject any protectionist role for the Brazilian state, opting instead forsupply-side economic policies and an extension of Cardoso’s privatizationpolicy. Defending international regulations (World Trade Organizationpolicies) as a means to attract foreign investment, rejecting protectionismfor local industries, and privileging foreign capital competing for publictenders (state contracts), Palocci argues: ‘Brazil doesn’t want to close itself.We want to sail the open seas of the global market’.63 He has rejected anystate intervention as ‘artificial mechanisms’ of public financing to stimulateconsumer demand among millions of impoverished Brazilians, adding that‘generating the right conditions, market forces will increase income andcorporate productivity’.64 Such an assertion ignores the fact that it wasprecisely the ‘market forces’ in Brazil which created the mass poverty andthe worst inequalities in the world over the last 100 years of capitalistexpansion. In keeping with this neoliberal approach, the Lula regimeapproved new price rises by privately owned utilities – thus increasing the


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burden on the poor in general, and the rural poor in particular.65 Given theprice/wage squeeze on those who sell their labour-power for a living, andthe potential for discontent, Lula is ensuring the loyalty of the police – hegranted them a 10 per cent salary increase.

Since he has identified pensions as the source of fiscal deficits, ignoringthereby mass tax evasion by the rich, the long-term tax concessions andincentives to the multinational corporations, Lula proposes a massivereduction in pensions, especially those of public employees. Citing ahandful of generous pensions paid to some top officials, the intention is toreduce public employee pensions to the low levels of employees in theprivate sector. In line with the ‘Third Way’ discourse, which labels allneoliberal policy as ‘reform’, Lula presents his pension reduction as a battlefor equality. This overlooks the fact that lowering public pensions to thelevel of private ones is equalizing misery, whereas progressive egalitarianmeasures would seek to do the opposite: raise the lower pensions to thelevel of the higher. The savings generated by these cuts in public sectorpensions will not only fund tax cuts for the industrial and agribusiness elitesin Brazil, but are also likely to further aggravate class inequalities,particularly in the countryside. Accordingly, the Lula regime is to reducetaxation paid by employers, particularly industrialists; by contrast, he hasincreased the taxes paid by salaried employees and wage workers by some27 per cent since coming to power. Lula justifies his regressive tax policieswhere employers and industrialists are concerned by insisting on thenecessity of maintaining capitalist ‘competitiveness’, while defendingincreased taxation on employees and workers because of the fiscal deficit.Unemployment is increasing, consumer purchasing power declines,increasing interest rates preclude new investments, and high budgetsurpluses allocated for debt repayments undermine public investments.66

Whereas early in his regime Lula and his economic team predicted upwardof 3 per cent growth, by the end of February 2003 most economists weretalking about zero per capita growth.67

The aim of Lula’s labour reform strategy is to weaken the trade unionsby undermining constitutional guarantees of labour rights, thereby loweringlabour costs to increase profits for employers, with the object of makingexporters more competitive. One piece of legislation proposes both toeliminate payments made by private sector capitalists to trade union fundsand to abolish obligatory payments of union dues. Another proposes toallow capitalist enterprises to impose labour contracts that override legallyestablished workers’ benefits.68 Any opposition to this from the main tradeunion organization – the Central Unica dos Trabalhadores (or CUT) – hasbeen circumvented by the simple expedient of co-opting the bureaucraticbosses of the CUT by offering them positions and stipends as advisers to


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Lula’s regime.69 Decapitating the leadership of the trade union movement inthis fashion has been effective, since co-opted union bosses either endorseor do not criticize his anti-labour policy. Thus, for example, CUT presidentJoao Felicio, one of the co-opted bureaucrats, has stated: ‘We have a certainsympathy for the reforms, but they have to be negotiated and imposedgradually.’ In a similar vein, the trade union national secretary of the PT,Hergurberto Guiba Navarro bluntly stated the purpose of labour reform:‘We are going to undertake a grand reform and many unions willdisappear’.70 Given Lula’s neoliberal policies where labour is concerned,plus his hitherto successful co-optation of the CUT leadership, it is notreally surprising that the main working class opposition now comes fromthe moderate right-wing trade union confederation Forza Sindical (FS). InMarch 2003, the metal workers affiliated with FS went on strike overdeclining real wages. FS is now leading the fight to reduce the workingweek from 44 to 40 hours, to increase severance pay, to extendunemployment benefits (to increase coverage from 5 to 12 months), and forlegal recognition of workers’ representation on the shop floor. Needless tosay, the Lula government is adamantly opposed to all of FS demands,claiming they are inflationary and threatening repressive measures againstwhat government spokespersons label as ‘political demands’, an old ployused by all previous right-wing regimes, not only in Brazil but globally.

The combined impact of economic liberalization policies, co-opting theCUT, and a deliberate manipulation by Lula of his working class origins inorder to promote a big business agenda was – and is – much appreciated bythe shrewd financiers on both sides of the Atlantic. Little wonder, therefore,that he received such thunderous applause from the super rich in Davos. AsCaio Koch Weser, German’s State Secretary of Finance, said of Lula: ‘Thekey is that the reform [= neoliberal] momentum gets the benefit of theenormous credibility that the president brings’.71 Lula’s appeal to the Davosbillionaires for ‘a new world order’ and contributions to an anti-povertyfund, however, drew scepticism and most probably discreet and cynicalsmiles. ‘Why’, asked a commentator in the financial press, ‘should thebillionaires support a new order when they are doing so well with theexisting order?’72 It is a sentiment with which it is impossible to disagree.

Agrarian Reform, Free Trade and US Imperialism

Currently, some of the worst poverty, hunger and under- or unemploymentworldwide is found in rural Brazil [CEPAL, 1998; ILO, 2000].73 Theprincipal problem is the concentration of landownership in the hands of asmall (mainly agribusiness) elite, the ‘other’ of which is the presence ofmillions landless peasants and rural labourers. Until the late 1990s Lulapromised peasants and agricultural workers comprehensive land reform if


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he were elected. On the question of the scope and extent of this agrarianreform, however, Lula was strangely silent. Once he was inaugurated, heannounced that for 2003, the agrarian reform target was to settle some 5,500families on 200,000 hectares of land. Lula’s target was a mere one-tenth thenumber of families settled under the previous neoliberal regime of PresidentCardoso, and only one-twentieth what the MST was expecting from the‘people’s president’. At the rate of settlement Lula was proposing it wouldtake a thousand years to provide the currently landless families withadequate holdings, while those who came after would remain landless.Once in office, Lula continued the old reactionary policy of violentlyevicting land squatters from unproductive land. His nominally left-wingMinister for Agrarian Reform announced new plans, to be unveiled in thesecond half of 2003.

Significantly, agrarian reform is equated by Lula not just with whatmight be termed a social (or humanitarian) programme, but also withpolitical ‘redemocratization’ and economic development.74 Hence theinterrelated nature of what he calls ‘a new economic model’:75

Fighting hunger includes both structural measures – in support ofsmall farmers… – and emergency relief to those suffering frommalnutrition. The social and political conditions are now in place tolaunch a sustainable cycle of development. That will require theenlargement of the internal market, particularly for mass consumergoods, by integrating into it millions of excluded citizens. Agrarianreform is also fundamental if the Brazilian economy is to be rebuilt.And it will play a crucial role in making the country fully democratic.

Ironically, this agrarian policy hearkens back in part to the developmenttheory advocated by the United Nations Economic Commission for LatinAmerica (ECLA) during the late 1950s and early 1960s. Like ECLA(nowadays ECLAC, reflecting the addition of ‘the Caribbean’), Lula sees inthe expansion of the internal market the key to economic growth in Brazil,and – again like ECLAC – he allocates a central role in this process to thepeasantry.76 There is, however, a crucial difference. ECLA advocated anagrarian reform programme in order to generate domestic industrial growth.Its idea was to take land away from unproductive and parasitic landlordsand redistribute it among peasants and/or landless agricultural labourerswho would cultivate it, and thus make productive use of this resource. Therural poor would thus secure the purchasing power necessary to generatedemand for consumer goods, a demand that would be met in turn bydomestic capitalists. This would prevent expenditure on the import offoreign consumer goods, making such savings available for infrastructuralinvestment, thereby contributing to industrialization. The latter could then


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be realized without borrowing from international banks, thus solving theinterrelated problems of inflation, balance-of-payments deficits, and theconsequent lack of national economic sovereignty.

In a neoliberal model, however, many of these same policy initiativeshave both a different meaning and – more importantly – a differentoutcome. That economic liberalization will be central to Brazilian agrarianpolicy is clear from the appointment by Lula of Robert Rodriguez, presidentof the Brazilian Agribusiness Association and strong advocate of geneticallymodified crops, as Minister of Agriculture.77 This appointment sits ill withthe Keynesian demand management of ECLAC, which required stateintervention both to expropriate large rural properties and to redistribute theholdings thus acquired among peasants and landless labourers. Lula hasshown no inclination to do this, much rather the opposite: his governmenthas assured national and international capitalists that existing propertyrights ‘will be respected’. ECLAC policy also required a strong state,willing to provide smallholders with credit and other inputs, as well as toundertake planning (low-interest loans, etc.) that would contribute to thedevelopment process. Such a role is the antithesis of Lula’s neoliberallaissez-faire state.78 Under the latter regime, it is likely that peasants andworkers will increasingly be required to migrate to the shantytowns, thereto provide cheap labour-power for multinational corporations fleeing higherlabour-cost areas by relocating to Brazil.

Several points are clear. Lula’s agrarian policies are a huge stepbackwards from the point of view of Brazilian politics. From theperspective of agricultural policy, his regime is fully committed tosupporting economic growth generated by the better-off: large landlords inBrazil, and in particular agribusiness export elites.79 His policies will greatlyenhance the already profound inequalities in the Brazilian countryside andlead inevitably to greater rural discontent. The most likely result will bebloody clashes between the landless peasants seeking land and the militarypolice implementing Lula’s law and order legislation. No doubt Lula willask for forgiveness and shed a few tears for the dead peasants as he proceedsto embrace his new allies among the big bourgeoisie, both national andforeign. An example of the latter are those connected with ALCA, a free-trade policy favourable to US imperialism.

ALCA is a radical comprehensive trade agreement which, ifimplemented, would transfer all trade, investment and other economicpolicies to a US-dominated economic commission, probably located in theUS, which would oversee the privatization and a US takeover of theremaining lucrative state-owned public utilities, petroleum, gas and otherstrategic industries. Throughout Latin America mass popular movementshave taken to the streets in protest against ALCA, and millions of peasants


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in Mexico, Ecuador, Colombia, Bolivia, Paraguay and Brazil have blockedhighways and demanded that their governments reject it. However, the mainobjection of Lula and his economic team to the implementation of ALCA isthat it must reduce trade barriers for Brazil’s big agribusiness exporters. Asmany critical economists have demonstrated, it is ALCA that will in the enddestroy family farmers and peasant agriculture, increase the number oflandless peasants, hunger and mass migration to the urban slums, making amockery of Lula’s ‘zero hunger’ programme. Lula’s derisory handouts oftemporary food relief will not compensate for the millions of new poor anddestitute resulting from his neoliberal agrarian policies. Recently Lula hasclaimed that his ‘zero hunger’ scheme was ‘much more than an emergencydonation of food. We need to attack the causes of hunger, to give fish and toteach how to fish’.80 Instead, with ALCA, Lula will be attacking the poor,not hunger, and strengthening and deepening the causes of hunger, notlessening them.

There are some 25 million landless Brazilians in the countryside, 95 percent of whom will not be the beneficiaries of any land reform, but who willbe further marginalized by Lula’s promotion of the agro-export strategies.There are 40 million un- and under-employed who have no futureemployment prospects, given Lula’s budget cuts and high interest rates.Hundreds of thousands of small and medium sized enterprises (and not afew large national firms) face bankruptcy from the high cost of credit (26.5per cent interest in March 2003), and the free trade policies promoted byLula’s regime. Rather than generate domestic demand, therefore, Lula’sagrarian policy will suck in imported consumer goods, dumped by advancedmetropolitan capitalist nations in so-called Third World countries theeconomic liberalization of which means they are no longer defended bytariff barriers. Unlike ECLA, Lula’s agrarian policy will in all likelihoodgenerate economic growth only outside Brazil, as multinationalcorporations repatriate earnings and profits at an estimated rate of return of22–34 per cent on capital invested.81

Rural Grassroots Opposition to Economic Liberalization?

Long before Lula’s electoral campaign of 2002, the main source ofgrassroots opposition to agribusiness interests and landlordism in ruralBrazil was the MST. Since 1983, the latter organization has – through greatsacrifice and discipline – occupied large landed estates and settled over350,000 families on close to 25,600 hectares of land belonging to largeproprietors – a rate of 345 occupations a year, involving up to 1,200 ruralfamilies [Dataluta, 2002; INCRA, 2000]. During his election campaign,however, Lula demanded that the MST cease to engage in land occupations– it complied, and undertook no land occupation or resettlement for the first


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time in its history.82 In his campaign speeches, by contrast, Lula sought thesupport of right-wing pro-landlord parties by promising to apply the fullforce of the law against ‘illegal land occupations’ – those outside the boundsof his proposed agrarian reform.

Prior to the presidential elections, there had been intense politicaldiscussion within the MST regarding the future direction of the movement.The rank-and-file membership was concerned that the PT was turning intoa conservative or social democratic electoral party, that many of the stateand locally elected PT leadership were hostile to agrarian reform, and insome cases actually repressed those who occupied land. In the light of theseconsiderations, three discernable tendencies emerged inside the MST. Rank-and-file members who composed the first of these concluded that the MSTshould form its own party, and unite with other social movements and leftistgroups. A second group within the MST conceded that the PT was becomingmore conservative, and similarly repudiated the right-wing PT governorsand mayors, but argued for a different political strategy. Namely, that theMST should run its own candidates within the PT, or at least work moreactively inside the party so as to influence it to follow a more progressivedirection. The third strand of opinion within the rank-and-file membership,and the most influential, at least among the national leadership, tried tobridge the differences between the first two. This tendency agreed to workoutside the PT, and to try to build a common platform with the progressivechurch, human rights groups and left intellectuals, the object being toelaborate an alternative programme and organization. Thus was born theConsulta Popular (CP), which began with great fanfare and then rapidlydecayed. This was because combined with this new tactic of a turn ‘to theleft’ was the old tactic of influencing the PT from within. In effect, the CPwas neither a new movement nor a new electoral party. It was squeezedbetween direct action and electoral politics and was unable to attract anysizeable trade union or urban support.

Unfortunately, most of the MST leaders cling to a misplaced optimism,and continued to pin their hopes for a positive outcome not so much on Lulahimself as on the Minister of Agrarian Reform and other left functionariesin the same ministry. Miguel Rossetto, the Agrarian Reform Minister andmember of the left Socialist Democracy tendency of the PT, argued hewould do everything in his power to comply with the agrarian reformpromises, but that he would have to do this within the extremely limitedbudget constraints imposed by his government – a clever piece ofdemagoguery. In the light of this inactivity over the agrarian reformprogramme, tensions mounted within the MST, as rank-and-file activistsand over 60,000 land squatters who were camped out under plastic tents(suffering from heat, cold, and food shortages) became increasingly restless.


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No emergency measures were forthcoming from the Lula regime, and asmall number of land takeovers began to take place. As it became clear thateven the limited agrarian reform programme was being relegated to the backburner, along with ‘zero hunger’ and other electoral promises made by Lula,the recommendation by some of the MST leadership to work to changethings from within began to wear increasingly thin. Some national andregional leaders publicly expressed their discontent with the government’sunresponsiveness.83 For example, Joao Paulo Rodríguez, the nationalcoordinator of the MST, demanded that the government provide a timeschedule within which to realize the agrarian reform, expressing worriesover the inaction – some 40 days after Lula’s inauguration. Rodríguezwarned the Lula regime that the MST rank-and-file members could notcontinue to wait, stating that there were 60,000 families waiting forsettlement.84 The government has appointed several progressivessympathetic to the MST and other groups to the Agrarian Reform Institute(INCRA) – but, somewhat predictably, with few resources. Moreimportantly, Lula has taken an extremely rigid and hostile position towardthe traditional land occupation tactics of the MST, promising to apply thefull repressive force of the law to curb the movement.85

Unleashing the government’s repressive apparatus, including the jailingof activists, forceful evictions,86 frameups by the judiciary, murders carriedout by paramilitary groups that are allowed to run free and act withimpunity,87 infiltration of the movement by the intelligence services, and –in August – the use of 800 military police to violently dislodge a group ofhomeless people from an unused lot in a Sao Paulo suburb, Lula has pushedthe agrarian reform movement back to the early 1980s, beyond the ‘newrepublic’ of constitutionally established civilian regimes. He continues toinsist that any agrarian reform measures will not respond to direct collectiveaction but will have to be part of a regime-sponsored programme, which inthe context of the post-election budget promises to be totally insignificant.

In August 2003, Lula was still talking about his ‘project’ to settle 60,000families on the land in 2003 but noted that progress would depend on thegovernment’s ability to reach an agreement with the IMF to reduce thelatter’s target for applying the mandated budget surplus to payment of theexternal debt.88 In this and other contexts Lula continues to play on theunavoidable constraints that his government has to work under. In early Julythe Minister of Agricultural Development stated that the government onlyhad sufficient funds to buy land for 11,300 families (as against Lula’sdeclared target of 60,000).89 This represents about a quarter of Cardoso’sland reform programme, and one-tenth of what the MST had anticipated andwas demanding. In January the federal budget had allocated 462 millionreais for the purchase of expropriated land under the government’s ‘land


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reform’ programme but after ‘adjustment’ it was reduced to 249 millionreais and in June INCRA’s budget was reduced to 162 million reais[Zibechi, 2003]. Under these constraints INCRA did ‘settle’ some 9,500families on their land between January and June but 7,000 of these familieshad had their plots assigned to them under the previous Cardoso regime.

In effect, Folha de Sao Paulo (3 July 2003) points out, Lula hasmanaged to reach less than 5 per cent of his target of 60,000 settled families,and this under conditions of growing violence (13 killings in land conflicts)and 128 occupations – more than those that occurred in the whole of 2002.All appearances aside, says Lula, informing anyone and everyone whomight be concerned (and many are) ‘the agrarian reform will beaccomplished in the adequate (sic) moment and in the measure that it ispossible’ (La Jornada, 18 August 2003).90

The MST faces a profound dilemma: after years of building a successfulmass independent socio-political movement that settled landless families onunproductive land via direct action (land occupations), it has in effect beenimmobilized. Its role has become instead a purely electoral one,campaigning on behalf of Lula in the hope of securing agrarian reformlegislation after his election. In the past, MST successes were based on itscapacity to initiate and then undertake independent mass action, aprogramme of direct action combined with electoral support for some of themore progressive candidates put forward by the PT. Having relied on Lula’selection as the fulcrum for a comprehensive agrarian reform, however, theMST is now faced with a regime that has repudiated every one of theMST/PT ‘shared reforms’. Sooner or later the MST will have to recognizethat the landless rural workers have no future with the Lula regime, that themovement will have to part ways and return to the tried and proven methodof mass direct action or suffer splits, decline and co-option.

CONCLUSION: PROSPECTS FOR CHANGE

One of the great political myths, and for those on the left a disabling one,has been and remains that the global demise of explicitly neoliberal regimes– such as those of Margaret Thatcher in the UK, Ronald Reagan and (thefirst) George Bush in the US, and Augusto Pinochet in Chile – signalledeither the end or at least a move away from the economically dominantneoliberal project. In fact, the opposite has been the case, since in eachinstance the successor regime (Blair in the UK, Clinton in the US, andAylwin in Chile) either continued with or did not challenge the project of itspredecessor. Although political labels changed, therefore, the economiccontent of the policies did not. Insofar as he continues implementing inBrazil the neoliberal agenda of Cardoso, Lula adheres closely to this pattern.


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The electoral programme of the PT spoke to all of the major concerns of thefinancial, industrial and agribusiness elites. Private property and privatizedenterprises would be respected. Foreign debt repayments would continue.Tight fiscal policies would be rigidly adhered to. Labour and pension‘reform’ would be at the top of the agenda. In keeping with ‘Third Way’idology, however, ‘reform’ signals weakened trade union rights, anti-labourlegislation, and reductions in public sector pensions. There would be – andthere has been – no indexation of wages and salaries, but there would be forbonds and debt payments. Land occupation by poor peasants andagricultural workers would be – and is – discouraged, and where it doesoccur it is repressed. Fitting neatly within this neoliberal programme, theagrarian reform would be minimal, underfunded, and remain ‘real’ only atthe level of rhetoric. Accordingly, the case of Lula and the PT represents abreak not between a new political leadership and an existing systemicproject, but rather between a new political leadership and the majority of itsgrassroots support.

As such, the volte face on the part of the Lula regime poses threeimmediate dangers. First, it threatens to undermine the living standards andworking conditions of the vast majority of Brazilians who depend on awaged income, especially those on the bottom rungs of the socio-economicladder – peasants and workers. The threat is all the more acute because itcomes from political parties (or a coalition of parties and socialorganizations) that were the prime defenders of the urban and rural workingclasses, and who have now joined their enemies, thereby leaving peasantsand workers temporarily defenceless.

Second, in addition to this process of socio-economic disempowerment,the right turn on the part of the Lula regime will also generate mass politicaldisillusion and alienation. Peasants and workers in Brazil will accordinglybecome disenchanted not only with the PT regime and its publicfunctionaries, but also with the whole spectrum of parties, trade unions andsocial movements which promoted Lula as the ‘people’s president’. It isprecisely this kind of depoliticization that creates a fertile ground forreactionary movements of the political right, which – as the events inEurope during the 1920s and 1930s underline – are not slow to recruitdisaffected plebeian opinion in town and countryside alike. Such a processis further fuelled by PT ideologues, like Sader and Frei Betto, who justifyLula’s politics as ‘realistic’ and/or ‘pragmatic’, thereby reinforcing the ideathat no alternatives exist to the present reactionary policies.91 And third, theinternational left, which by joining the chorus praising Lula, is reinforcingits own movement toward political debacle. The endorsement of Lula’selectoral victory in Brazil as the greatest revolutionary change since the1959 Cuban revolution, the election of Allende as Chilean president in


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1971, or the 1979 Sandinista revolution in Nicaragua, is likely to generate asimilar kind of disillusion among the international political left.

Among the possible outcomes, two are as follows. On the one hand, apart of the Latin American left will take Lula’s right-wing path as a model,and abandon historical demands for policies/programmes that reflect theinterests of peasants and workers at the rural grassroots (domestic economicplanning, collective/cooperative land reform, income redistributionmeasures, anti-imperialist foreign policy initiatives, etc.). This will be doneby invoking the ‘constraints’ facing Lula, and other such rationalizations.On the other hand, some left-wing movements will be compelled to rethinkthe entire electoral strategy, particularly the relation between party andmovement. From a practical and historical perspective, therefore, it is clearthat the divorce of the PT from the mass movement and mass struggle earlyon laid the groundwork both for its current devotion to class collaborationand eventually for its pro-imperialist policies. In other words, the palpablebankruptcy of the parliamentary road to bourgeois ‘redemocratization’, letalone anything resembling socialism, may give an impetus once more to thenon-parliamentary alternative.

In the case of Brazil, the dynamics of class struggle and the emergenceof direct action mass movements like the MST were instrumental in creatinga challenge to the prevailing neoliberal orthodoxy. Although the failure ofthe neoliberal project – economic stagnation, deepening inequalities,ballooning external debt – together with a leftist critique, created the basisfor the decline of the traditional right, this combination was not of itself asufficient condition for the rise of radical or even reformist alternatives.What happened instead was the adoption of a stereotypically populiststrategy, whereby the neoliberal project continued under a different politicalbanner, based now on an incorporated plebeian – and petit-bourgeois –leadership drawing support from a socio-economically heterogeneous base.In short, a multi-class alliance composed of workers, elements of thebourgeoisie, poor peasants and landless agricultural labourers, all led by ex-leftists, but directed and subordinated to the interests/objectives ofinternational capital.

The effectiveness of this populist ‘Third Way’ strategy derived from adual process: the retention of an oppositional rhetoric (= radical discourse)about the desirability/achievement of grassroots empowerment that wasnevertheless combined with what was actually a disempowering economicproject. Hence the break by the PT with its leftist past was made possiblebecause of the plebeian nature of the leaders, the manipulation of popularimagery and the hierarchical, personalistic and authoritarian nature of theparty leadership. The grassroots origins of the leadership neutralizedinternal leftwing opposition (= ‘I/we understand your situation because it


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was my/our experience as well’), which enabled it to proceed along a right-wing path, claiming that this was in conformity with grassroots opinion.Consequently, no dissenting voice from the ranks of pragmatic ideologuesin the ‘people’s movement’ was raised against the ‘people’s president’ whenLula embraced George W. Bush, calling him an ‘ally of Brazil’.

Lula has a clear, coherent neoliberal strategy based on an alliance withthe IMF, Washington, overseas investors and creditors, and an internalalliance with key elements of the dominant class, including the agro-exportelite. The harsh budget cuts, the decline in pension payments, the realreduction in the minimum wage, and the deterioration of social services willall reduce living standards below current levels. These policies will have anespecially deleterious impact in the Brazilian countryside, on poor peasantsand workers. Payments to wealthy bond-holders, subsidies to big agro-exporters and inflation will all widen the existing inequalities. AlthoughLula is still seen by some as ‘the Brazilian workers’…last chance to makea humane country out of their grotesquely unfair society’ [Cooper andFrasca, 2003], his neoliberal policies will lead to a more profound social,financial and economic crisis than that which affected the Cardoso regime.High interest rates, budget cuts and the payment of the debt (the equivalentto 65 per cent of GDP) will undermine productive investments, weaken thedomestic market and increase future debt obligations, leading to adeepening recession. In short, the economic conditions generatingopposition are already in place: all that remains is the organization of acoherent opposition to Lula’s continuation of the neoliberal project, and it isprecisely over this process that he still exercises some power. The prognosisfor the emergence of a coherent opposition from within the part or regimeis therefore not good.

Together with his advisers, Lula has put in place an effective strategy tolimit internal party opposition, using the carrot (= offering ministries andsecretariats) and the stick (= persistent critics threatened with censureand/or expulsion). Through state patronage and party discipline, he hasconverted PT mayors and congress people into transmission belts for hisharsh austerity programmes. There are exceptions, of course; a handful ofPT elected officials who still uphold the traditional social democratic,reformist programme, but they have been marginalized, abandoned in largepart by their former comrades with a voracious appetite for the spoils ofoffice and small fiefdoms of state power. Bluntly stated, having enforcedcompliance within the party, the regime now has both the will and the powerto impose harsh neoliberal policies on the nation generally, and especiallyon the rural poor. Having put all their efforts into supporting Lula, theopposition – the left PT and the social movements – continue the hopelesstask of working within the elite, hierarchical party apparatus, where they


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have no future prospect of changing the political course of the regime.Accordingly, the main source of potential opposition to Lula is currently

to be found outside his government and the existing party hierarchy. Thisunderlines the extent to which it is perhaps necessary to rephrase thequestion contained in the title: from ‘Whither Lula’s Brazil?’ to ‘Is BrazilLula’s?’ The small but disciplined United Socialist Workers Party (PSTU)has been gaining a following among trade union militants in the CUT andcurrently influences about ten per cent of the Confederation. The PSTU haspotential for growth, but will become a formidable opposition only if itallies itself with other larger and more significant social movements,political opponents, church dissidents and trade union forces. One suchconfiguration could find left-wing MST leaders, a sector of the CUT,progressive Catholic clergy and dissident left PT leaders (about one third)and the PSTU coming together to form an alternative opposition coalitionor political party, one which focuses on mass direct action over and againstelectoral politics.92 This possible formation has tremendous possibilities intaking up the banners of anti-ALCA mobilization, debt repudiation,opposing internal market development, and arguing instead for an agrarianreform programme plus re-nationalization of strategic industries and banks.Strategically this opposition should be in a powerful position.93 The rightturn of the Lula regime, the precipitous decline in living standards and thedeepening recession will put at risk his initial high popularity ratings, andgrassroots disenchantment is growing, leading to open expressions ofdiscontent. Strikes among metalworkers started within two months of histaking office, and land occupations by landless workers have spread.

Despite the favourable strategic objective and even subjectiveconditions for the re-emergence of a new left-wing formation, however,there are serious political obstacles militating against the emergence of aunited and powerful opposition. First is the absence of a political party witha national following that is capable of serving as a focus for regrouping. Anew leading political party has therefore to be created in the course of thesocial struggle which will, in the beginning, be led by social and politicalfragments of the rural and urban working class. At the moment the MSTconstitutes the main organized form of opposition to the neoliberal modeland the Lula regime, but it has not managed effectively to move into thecities, linking up with forces of resistance there; nor has it managed to eludethe trap set for it by Lula and the PT. The leadership has to distance itselffrom Lula and return to its roots, but even so it is unlikely to constitute apolitical formation that can contest the impending struggle for state power.Second, the new political formation will have to engage in a fierceideological struggle to counteract the label ‘people’s president’ and itsspurious claim to empower grassroots Brazilians. This will be a lengthy


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struggle, not least because of the politically entrenched position of thosedefending Lula (the mass media, ex-leftists). Third, any new politicalformation will have to avoid being linked to right-wing criticisms of theregime, though there is plenty of room for possible tactical alliances withthe moderate trade union, Forza Sindical, on issues of wage, salaried andlabour legislation. And fourth, any political formation will have to developtheoretical and programmatic clarity about a series of interrelated politicalissues: not just the major contradictions undermining the viability of Lula’seconomic model, but also the nature of the neoliberal crisis, and theaggressive new imperialism of the US.

Any new political formation will also be faced with a majororganizational task. There are over 90 million Brazilians living in poverty,most of whom are not organized and will be impoverished further by Lula’spolicies, the so-called zero-poverty programme notwithstanding. This isespecially true of the countryside, where the diversity of relational formsand regional/locational interests threaten to fragment any attempt at nationalunity. In both urban and rural Brazil, therefore, the political opposition isconfronted by a formidable challenge of organizing not just the unorganizedbut the disorganized.94 Without such organization, any mobilization willamount to nothing more than spontaneous and local protests, easily andharshly repressed by the state, as Lula has promised the transnationalcapitalist class. The danger is that this will lead to disenchantment,favouring recruitment by right-wing parties. Finally, any new politicalformation, whilst appealing to the discontented voters abandoning Lula,must also make a thorough and complete break with the PT, a party that –like many others in Europe and Latin America – began on the left and hasfinished on the right.

ACRONYMS

ALCA Area de Libre Comercio de las Américas [Free Trade Area of theAmericas – FTAA]

CP Consulta Popular [Popular Consultation] CUT Central Unica dos Trabalhadores [All Workers Central]ECLAC Economic Commission for Latin America and the Caribbean

[Comisión Económica para América Latina y el Caríbe –CEPAL]

FS Força Sindical [Unionized Force]Fome Zero Zero-Hunger programme INCRA Instituto Nacional de Colonização e Reforma Agrária [National

Institute of Colonization and Agrarian reform]MST Movimiento dos Trabalhadores Rurais Sem Terra [Movement


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of Rural Landless Workers]PC do B Partido Comunista do Brasil [Communist Party of Brazil]PSTU Partido Socialista dos Trabalhadores Unificado [United

Socialist Workers Party]PT Partido dos Trabalhadores [Workers Party]

NOTES

1. It is of course true that the iconic date 11 September is now associated wholly with the eventswhich occurred in New York in the year 2001. For inhabitants of and those with an interest inLatin America, however, that same date – equally iconic – is ineradicably linked to an eventthat took place three decades earlier, the military coup in Santiago de Chile in 1973.

2. For ‘Third Way’ politics, and significance of the participation by Lula in the celebration of thisapproach, see below. In the words of one of its exponents [Giddens, 1998: 26, 70], the ‘ThirdWay’ is described politically as ‘the radical centre’, and is said to constitute ‘an attempt totranscend old style social democracy and neo-liberalism’.

3. This dilemma is rather obviously an old one, and evokes some longstanding debates on theleft about the nature of power, its political capture and retention. Not the least of the manyironies here is that Allende regarded himself, and was regarded by many others in LatinAmerica, as the embodiment of a constitutional (= ‘moderate’) socialist politics, working torealize the latter objective within and through the existing state apparatus. His approach topolitical power was accordingly regarded as the antithesis of revolutionary socialist agency (=guerrilla activity) designed forcibly to capture and overturn the state, a position represented atthat conjuncture by Fidel Castro and Ernesto Ché Guevara. Indeed, in an interview with RégisDebray [1971: 74] Allende drew attention to precisely this distinction, observing: ‘there issomething else I want to show you, something which has inestimable value for me. Somethingexceptional, which I guard as a treasure: The Guerrilla War [the book about the 1959 Cubanrevolution written by Ernesto Ché Guevara]. This copy was on Ché’s desk; it must have beenthe second or third copy, since I imagine the first was given to Fidel. And here is a dedicationwhich reads: “To Salvador Allende, who is trying to obtain the same result by other means.Affectionately, Ché.”’

4. Advocates of a non-parliamentary road to Latin American socialism included not just theTupamaros in Uruguay (on which see Labrousse [1973]) but also Debray [1967; 1970; 1975],whose theory of ‘the Long March in Latin America’ popularized the strategy of the guerrillavanguard (= foco), as applied by Castro to Cuba and Guevara to Bolivia [Peredo, 1970]. Theinfluential views of Debray were discussed critically in Huberman and Sweezy [1968], Ramm[1978], and also by their author [Debray, 1973: 40ff.; 1977].

5. In the category of those who advocated following a parliamentary road to socialism comemost, if not all, Moscow-affiliated Latin American communist parties. Compared to thecautious conservatism of the latter, for whom the political objective remained always therealization not of socialism but rather of bourgeois nationalism, the Popular Unity coalition ofleftist groupings headed by Allende [1973] attempted to put into practice a socialistprogramme, albeit within the context of a bourgeois polity. As many have argued [Payró etal., 1971; Palacios, 1979] this was always going to fail, given that the capitalist class wouldbe unwilling to surrender its ownership/control of the means of production (mines, industry,land) to any president, regardless of any popular mandate to do so.

6. Some 52 million Brazilians voted for Lula, and a crowd of 200,000 cheered him at hisinauguration. Six months later Lula would receive the Prince of Asturias Prize forInternational Cooperation in Oviedo, Spain. The award was given for his ‘admirable record offighting for justice’, his status as a ‘symbol of hope’ and his role as ‘the promoter of politicalattitudes marked by good sense’. He received this prize at a time when, as Sylvie Duchamp,writing for the liberal magazine Revista Cambio in Bogota, puts it: ‘Every day it is clearer


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that, even though he won office with his left hand, he is now governing with his right. Thosewho accused him of being a dogmatic socialist have been forced to eat their words … justwhen observers closed their eyes so they would not have to watch the disaster hit, Lula choseto continue his predecessor’s economic orthodoxy and followed the recipe to the letter.’

7. According to Candido Grzybowski, head of a social policy thinktank in Rio de Janeiro, Lula’svictory represents a ‘new stage of the national project, where the poor, the marginalized, theworkers become the driving force in the rebuilding of the nation’. Citing the Italian socialistAntonio Gramsci, he says, ‘there are times when an individual becomes himself the project.This is one of those times.’ Bello [2002], another leftist critic of the anti-globalization project,opines that ‘over the last 22 years, the PT under Lula’s leadership has developed a distinctiveelan, one that combines the fervor of an insurgent movement with the hardnosed pragmatismof an electoral party’. The PT, he adds, ‘is perceived as a non-traditional party that is solidlyrooted in the masses … uncorrupt … [and] innovative’. Unlike other parties on the left, Bello[2003] continues, ‘the PT [can be] seen as non-doctrinaire and flexible’. In this connection hequotes Kjeld Jacobson, head of the international relations department of CUT (the Workers’Confederation), to the effect that ‘the party started out quite sectarian but it soon learned thatto win elections it had to make alliances. Without these alliances, the most you could get wasonly one third of the vote, so if you wanted to win elections, you had to win the centre.’ Ittranspires that ‘you’ – Lula – also have to win the support of those on the far right.

8. Leonardo Boff, a Brazilian priest who was in the forefront of the Theology of Liberationmovement in Latin America, opposed the power of the institutional Roman Catholic church,and was considered by much progressive political opinion – in Brazil and Europe – assomeone who could genuinely be said to be a voice of the poor in Brazil [Boff, 1985, 1992;Boff and Boff, 1987; Boff and Elizondo, 1995].

9. Starting out as an impoverished migrant from the Brazilian Northeast, Lula entered politicallife as the feisty head of a metalworkers’ union in San Bernardo de Ocampo, one of theproletarian strongholds in the vast Sao Paulo industrial belt. Persecuted by the militarygovernment, he came to prominence as a mass leader at a time when social struggles weregathering the momentum that would eventually displace the military dictatorship (1964–85)and establish the social movements as a key actor in Brazilian political life. The PT, whichLula helped found in 1980, was one of the points of confluence of the struggles involvingworkers, peasants, urban poor, the progressive intelligentsia, and Church activists [Bello,2002].

10. Among the many texts that fall into the category of over-optimistic interpretations of Lula arethose by Gurgel [1989], Meneguello [1989], Sader and Silverstein [1991], Keck [1992],Lemanski-Valente [2001], Branford and Kucinski [2003], and Saad-Filho [2003]. Late in2003 it is still possible to encounter the following inaccurate assessment, this time in an articleby Wallerstein [2003: 23]: ‘The currency devaluations of the 1990s in East and Southeast Asiaand Brazil brought to power a series of leaders – Roh in South Korea, Putin in Russia,Megawati in Indonesia, Lula in Brazil – whose electoral platforms or performance in officehave not always followed Washington’s prescriptions’.

11. Kenneth Maxwell, Director of the Latin America Programme at the Council on ForeignRelations, represents a somewhat ‘sober voice’ in this cacophony of unbridled support forLula’s wholehearted, if unanticipated, adoption of the neoliberal agenda. Like others,Maxwell admires the way in which the PT has consolidated its hold on government bycatering to powerful foreign investors and the domestic political and economic elite withoutlosing the allegiance of the overwhelming majority of Brazilians, who have been persuadedto set aside promised improvements to living conditions pending a resolution of the state’sfiscal crisis. At a meeting in Washington on 20 June 2003 with George W. Bush, Lula isreported to have agreed that the negotiations on ALCA (see below) would be concludedsuccessfully by January 2005, a date fixed by the US (see La Jornada, 21 June 2003).

12. On Cardoso’s neoliberal agenda and policies see Petras and Veltmeyer [2003a; 2003b].According to University of Rio de Janeiro economist Reinaldo Gonçalves, a comprehensiveindex that takes into account key items like the public debt, external debt, inflation, inequality,and unemployment would ‘unambiguously show that the economic record of Cardoso is theworst among all of the country’s 24 chiefs of state’ [Bello, 2002]. We concur with this view –


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see Petras and Veltmeyer [2003a] – but would add that Lula might very well emerge as aserious challenger to Cardoso in this regard.

13. For the views which follow, see Naomi Klein, ‘Masochistic capitalists’, The Guardian,London, 15 February 2002, p. 21. The significance of Klein’s idealized perception of Brazilian‘redemocratization’, decentralization, and grassroots self-empowerment lies in the influenceof her ideas [Klein, 2000] on current opposition to capitalism, in the form of the anti-globalization movement. If her alternatives to capitalism are, as is argued here, not merely nothreat to capitalism but actually no challenge to neoliberalism, then Klein’s alternatives turnout to be nothing more than ‘alternatives’. It is perhaps because of the latter that she receivessuch kid-gloves treatment at the hands of the capitalist media. Her populist approach to theissues raised by economic liberalization is part of what is now a large literature, and in essenceno different from that of Giddens (see below) and Negri and Hardt [2000] – on which seePetras [2002].

14. On the development project as a means of staving off pressures for revolutionary changewithin the popular movement see Veltmeyer [2002]. As to the anti-globalization movement,there is clear evidence of its being used by the self-appointed guardians of the new world orderas a means of retreating from an ideologically ‘pure’ neoliberal model of capitalistdevelopment (on this argument see Veltmeyer [2003]).

15. On decentralization as a neoliberal agenda item – in fact, as part of the Washington Consensuson ‘correct’ or ‘sound’ policy, designed to bring about a politically more acceptable form ofgovernment – see Veltmeyer [1999].

16. As de Souza Martins [2002], Nugent [2002] and Assies [2002] have all pointed out recently,the landless who occupy rural land in Brazilian and Bolivian Amazonia have at best only veryinsecure forms of tenure, and are thus invariably dispossessed of the little they have managedto acquire. Frequently evicted or murdered, their smallholdings are subsequently repossessedby large agribusiness enterprises, the owners of which then consolidate such plots within anincreasingly extensive property portfolio. Since Klein’s populist schema, based as it is simplyon ‘redemocratization’ at the grassroots, avoids the question of class and state power, therewould as a consequence be nothing to prevent this from happening. A capitalist state wouldmost certainly not prevent workers and poor peasants from being evicted in this manner, andagribusiness capitalists would as a result face no institutionally powerful opposition to suchland appropriation.

17. The literature advocating ‘redemocratization’ is now very large, and the more significantcontributions are Keane [1988a; 1988b], Bobbio [1990], Bresser-Pereira et al. [1993], Mouffe[1993], Lemanski-Valente [2001], and Fung and Olin Wright [2003]. From the same politicalstable as the seemingly progressive but equally slippery concepts ‘good governance’,‘modernization’ and ‘reform’, the term ‘redemocratization’ is indicative of a naive faith in thenon-class character, hence politically disinterestedness and thus innate virtue, of government.It is this misplaced belief, as much as anything, which informs the view held by Unger [1987b:17, 20, 21] that whether or not economic development took place historically was itselfdetermined by the ability of central government to protect the peasantry by controllinglandlords and/or warlords (see below).

18. That a ‘kinder/caring’ capitalism is the object of ‘redemocratization’ is evident from, forexample, the arguments contained in Edwards [2001], an enthusiast of the ‘Third Way’.

19. Associated with the ideas of Giddens [1994; 1998; 2001], the ‘Third Way’ can be describedmost charitably as an eclectic collection of mutually incompatible (and thus politicallyirreconcilable) policies, and at worst as a jumble of platitudes amounting to no more thaneffusive froth. To begin with, it is not clear what comes under the rubric of the ‘Third Way’.At one point, therefore, Giddens [1994: 68–9] equates it with market socialism, only to denythis link subsequently (‘There is no Third Way of this sort…’). When, finally, policies emergefrom the theory, the inescapable impression conveyed is of tautology combined withmotherhood-and-apple-pie (= a desire to please everyone). Accordingly, ‘the overall aim ofthird way politics should be to help citizens pilot their way through the major revolutions ofour time’: the latter, it transpires [Giddens, 1994: 64], are ‘globalization, transformations inpersonal life, and our relationship to nature’, a very New Age agenda. The same is true of whatare termed ‘Third Way’ values [Giddens, 1994: 66]: namely, ‘equality, protection of the


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vulnerable, freedom as autonomy, no rights without responsibility, no authority withoutdemocracy, cosmopolitan pluralism, philosophic conservatism’. There are obvious difficultieswith this agenda, not least the fact that the sources of inequality and vulnerability – propertyrelations – remain intact. Moreover, how such an agenda is to be enforced in a context wherethe power of the state is itself to be curtailed – another ‘Third Way’ objective – is somethingGiddens also fails to address.

20. Hence the view [Bresser-Pereira, 2001: 367, 370] that: ‘the old left [= Marxism] in Brazil iscorporatist and statist, while the new left [= the ‘Third Way’] is pro-market and is committedto reform…[t]he new left parties are mostly supported by the new professional middle class,[and] associated with progressive capitalists – a concept that is quite elastic…[the new left]believes that the market is a more efficient resource-allocating mechanism than the State… Itdoes not believe, as the old left does, that increasing taxes is always a good solution’. Not theleast of the many ironies here is that the concept ‘progressive capitalist’ is lifted straight fromthe discourse of those Third World communist parties allied with Stalinism, and for whichnationalism (spearheaded by a ‘progressive national bourgeoisie’) replaced any notion ofsocialism and revolution. It was precisely because of such conservative nationalist politics thatcommunist parties ceased to be relevant to peasants and workers in the Third World. Thesesame discredited views are once again on offer, but now recycled by exponents of the ‘ThirdWay’.

21. Much, if not most, of the ‘Third Way’ programme [Giddens, 1998: 70] – a ‘new democraticstate (the State without enemies), active civil society, the democratic family, the new mixedeconomy, equality as inclusion’ – might have been formulated by neoliberals.

22. The role of the term ‘redemocratization’ in ‘Third Way’ discourse is analogous to that of‘reform’, another word which in the past has described a progressive kind of change (e.g.,property expropriation, declining income differentials) involving redistribution of resourcesfrom rich to poor. As used by exponents of the ‘Third Way’, however, the word ‘reform’entails the opposite process: the redistribution of resources from poor to rich.

23. On the need for ‘democratizing democracy’, see Giddens [1998: 70ff.], who notes evasivelythat ‘[t]he crisis of democracy comes from its not being democratic enough’. Only bycollapsing the distinctive – and in political terms, very different – forms of democratic controlinto a single variant is it possible to maintain that a non-specific form of ‘democracy’ is itselfan achievement. As Marxists, and others, have frequently pointed out, the nature of anydemocracy and its accompanying control is conditional on the socio-economic structure (andsystem) of which it is the political expression. If formal political democracy operates in thecontext where means of production and consciousness-forming media all remain in privateownership, what passes for ‘from below’ control will invariably reflect a ‘from above’ agenda.That is, circumstances in which democracy – already existing or in a ‘new’, ‘redemocratized’version – is compatible with a disempowered grassroots and a reactionary politics. Giddens[1998: 81ff.] avoids this problem, as indeed he must, and argues instead for the provision ofwhat are in essence meaningless palliatives, such as ‘greater state transparency’, ‘openness’,and ‘inclusivity’, all of which are to be overseen by non-state agency (‘self-help’, voluntarywork, NGOs, etc.). There is little in this agenda that would not have attracted the enthusiasticendorsement of that prefiguring Victorian apologist for laissez faire, Samuel Smiles [1877].

24. As Giddens [1998: 79–80, 85, 86–9, 104, 110–11] makes clear, the concept of political andideological ‘community’ – that is, community based on material inequalities that structureexisting capitalist property relations – is central to the ‘Third Way’.

25. Like so much of the framework on which his views about current ‘redemocratization’ arebased, Unger’s conceptual apparatus has its roots in the analysis by him of the way in which‘agrarian bureaucratic empires’ do or do not develop. The desirability of ‘redemocratization’,or a politically inclusionary approach within neoliberal capitalism, is echoed in his argumentthat, historically, landlords and other elements of the ruling class in ‘pre-industrial’ agrariansocieties baulked at the destruction of an independent peasantry, favouring instead ‘aninclusive, commercial economy’ [Unger, 1987b: 21, emphasis added]. In other words, in thepast – as in the present – the panacea to the ills of society took the form of the desirability ofpolitical inclusion of peasants and workers within an exploitative/oppressive economicsystem. Hence the origin of an ‘inclusive’ politics, a spuriously progressive term, means


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nothing more than the incorporation (or reincorporation) of peasants in a way that continueseconomically to benefit those who extract surplus labour from them. This in turn underscoresthe importance to Unger of ‘the political’, and its deterministic role where systemictransformation is concerned. A symptomatic observation in this regard is as follows [Unger,1987b: 21, emphasis added]: ‘So the whole dynamic of occasional declines into naturaleconomy, limits on this decline, and reversals of it, grew out of a characteristic situation ofgroup struggle. This situation has to be understood in its unity if it is to be understood at all.Even the aspects of the process that seem most narrowly economic had no life apart. They,too, were politics.’

26. Hence the systemic goal is for Unger [1987a: 462ff.] ‘political stability in an empowereddemocracy’, or – less charitably – the property relations of capitalism without, if possible, theclass struggle (= ‘instability’) which they generate. His programmatic utterances, like those ofGiddens, are a mish-mash of contradictory motherhood-and-apple-pie pronouncements (=something for everyone). The latter take the form of ‘rights’ to just about everything – tosolidarity, to immunity, to the existence of and participation in the market, and againstdestabilization [Unger, 1987a: 520, 524, 530, 535]. What happens in a zero-sum context whenthese ‘rights’ come into conflict with or negate one another is something he fails to elaborate.

27. The two prefiguring models are: peasant family farming applied by Chayanov [1966] toRussia; and agricultural involution applied by Geertz [1963] to rural Indonesia. Both the latterposit a ‘natural’ limit to economic growth, determined by the consumption needs generatedfrom within peasant economy, a traditional equilibrium to which cultivation reverts. Populistsinterpret this process of reversion as evidence for the stability of pre-modern cultivationpracticed by smallholders in what the former take to be natural ecosystems.

28. At the centre of Unger’s framework is the concept of a ‘reversion cycle’, or the periodic returnon the part of what he terms ‘agrarian bureaucratic empires’ to natural economy, with aconsequent decline in commercial activity, trade and prosperity. This happens, Unger [1987b:6ff., 10ff., 15ff.] maintains, either when government fails to ‘protect’ smallholders fromexpropriation by landlords, or when peasants, petty traders and agricultural workers combineto resist landlord oppression. Only when ‘from below’ organization is effective, when ‘eliteunity’ is lacking (and the state disintegrates), or when government succeeds in preventing‘from above’ appropriation from occurring, is ‘reversion’ avoided. In such circumstances(state protection, peasant fightback, or elite disunity), peasant households survive as economicunits fully integrated into the ‘monetary commercial economy’, and systemic developmentoccurs. Of the many substantial theoretical objections that might be levelled at this rather oddtheory, two can be mentioned here. First, Unger places a seeming unbridgeable historicaldivide – between state and landlord – where in reality none exists. In the kind of pre-capitalist(= ‘pre-industrial’) agrarian societies he talks about, landlords were the government, or theruling class. Even where the latter disagreed on specific policies (= ‘elite disunity’), therefore,it would unite when faced with a threat from below. To see this in terms of an absolutedichotomy (state v. landlord) is accordingly incorrect (a point Unger [1987b: 17] subsequentlyconcedes). And second, in contrast to Unger – for whom the disintegration of the stateprevents a unified elite from mobilizing its power against the peasantry, the latter becomingas a result integrated into the ‘monetary commercial economy’ – it is precisely when centralstate power disintegrates that ‘natural’ (or peasant) economy reasserts itself (as Kautsky andWeber argued with reference to the decline of the Roman empire).

29. For the account of this, see Correio Brasiliense (Brasília), 28 Sept. 2002. Significantly,perhaps, at this point Lula had already become a convert to the neoliberal project (see below).

30. As Unger [1987b: 12] puts it, this involves a capacity on the part of peasants for a ‘plasticityof social relationships’, or peasant fight-back based on an ‘infinite susceptibility to penetrationand revision by collective effort’.

31. In the 1960s and 1970s this political option was provided to the rural proletariat in the formof government-led and externally assisted programmes of land reform, rural credit schemes,etc. In the 1990s, in a very different (neoliberal) context the same option is provided to ‘civilsociety’ (its popular sector, particularly the anti-systemic social movements) as a participatoryform of sustainable – and local – (community-based) development that is initiated ‘frombelow and within’ rather than ‘from above and the outside’. On the dynamics of this political


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option in the current context see Veltmeyer [2003a].32. About this twofold process of ruling class self-perpetuation – expelling old elements no longer

relevant to its survival, and politically incorporating within its ranks new elements thatthreaten the continuation of its power – Mosca [1939: 65] comments: ‘What we see is that assoon as there is a shift in the balance of political forces – when, that is, a need is felt thatcapacities different from the old should assert themselves in the management of the State,when the old capacities, therefore, lose some of their importance or changes in theirdistribution occur – then the manner in which the ruling class is constituted changes also. If anew source of wealth develops in a society, if the practical importance of knowledge grows,if an old religion declines or a new one is born, if a new current of ideas spreads, then,simultaneously, far-reaching dislocations occur in the ruling class. One might say, indeed, thatthe whole history of civilized mankind comes down to a conflict between the tendency ofdominant elements to monopolize political power and transmit possession of it by inheritance,and the tendency toward a dislocation of old forces and an insurgence of new forces; and thisconflict produces an unending ferment of endomosis and exosmosis between the upper classesand certain portions of the lower.’

33. Influenced by conservative thinkers such as Michels, Sorel and Pareto, Gaetano Moscadeveloped his theory of a ruling class based on circulating membership whilst at theUniversity of Palermo in the period 1878–81. Significantly, Unger [1987b: 22] subscribes toa process – the recruitment of new members ‘from below’ by an existing ruling class intent onpolitical survival – that is similar to Mosca’s argument about the circulation/reproduction ofelites.

34. Hence the innate pessimism of Lippmann [1955: 34–5] about the democratic process: ‘TheWestern liberal democracies are a declining power in human affairs. I argue that this is due toa derangement of the functions of their governments which disables them in coping with themounting disorder. I do not say, indeed it is impossible to know whether the malady can becured or whether it must run its course.’

35. For the conceptualization of ‘the political class’, and its accompanying claim that such a classalways rules, merely renovating itself from time to time by recruiting to its ranks (= co-opting)the more talented or enterprising individuals who have thrust themselves up from thegrassroots, see Mosca [1939: 50ff.].

36. Of course, for Burham, the nonruling or ruled majority did not just constitute anundifferentiated social mass but was constituted of different classes. As many sociologistswould later argue, Burnham assumed that managerial talent was not innate but needed to benurtured and that most of this talent would be found not within the grassroots of civil societybut within the upper reaches of the middle class that in modern societies was formed in thespace between the working and lower classes on the one hand and the positively privilegedupper class on the other.

37. Information and estimates concerning the social composition of the PT membership is derivedfrom direct personal observations and diverse discussions with different members. Images ofBrazilian slums as an urban dystopia are fuelled and reproduced in the popular culture ofmetropolitan capitalist countries by films like City of God.

38. From its founding to the late 1980s, the PT had a vibrant, open, free-wheeling internal life.Members came to general assemblies and debated with leaders and held them responsible fortheir policies, speeches and presence or non-presence at popular demonstrations. Leadershipwas collective and the different political tendencies argued their positions without fear ofexpulsion or being disciplined. To outside observers, particularly conventional socialscientists from the United States, the internal party life was ‘chaotic’. Yet great advances weremade in recruiting new activists, militants volunteered for political activities and electoralcampaigns and the party advanced despite the universal hostility of the mass media.

39. By the end of the 1980s, the social-democratic electoral wing of the party had gainedascendancy and proceeded to discipline and expel some sectors on the radical left of the party.Assemblies were replaced by leadership meetings of full-time functionaries who implementedpolicies and then opened the floor to debate with their radical counterparts in the partyapparatus. Thousands of activists began to drift away, partly due to the growth of clientelism,partly due to the emerging vertical structures, but mostly because the party turned almost


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exclusively toward electoral politics. Outside observers continued to write about the PT as ifit was still the ‘horizontal grassroots’ organization of earlier years, confusing the debatesbetween the different tendencies (left, right and centre) of the party apparatus with the earlierpopular assemblies. By the election of 1994 and continuing with greater intensity thereafter,the PT became a personalist party organized around Lula, as the embodiment of the PopularWill, and the competing party barons in their power bases in state and municipal governments.Increasingly, voluntary party activists were replaced by paid functionaries, politicalappointees to public office and public relations specialists in polling, image-making andtelevision advertisements. Strict rules on electoral financing were breached as the leadershipsought and accepted funds from state contractors to pay for the new and expensive mass mediastyle of electoral campaigning.

40. Again, these differences, although subject to diverse interpretation, are quite evident to us andother observers of the Brazilian political scene. Since what is happening is well documentedin the extensive periodical and pamphlet literature, it remains only to provide a politicallymore systematic analysis of these dynamics. Our interpretation is based on periodic visits andextensive discussions with numerous Brazilians who are both participants in and observers ofthe processes outlined.

41. With the new millennium, the party was run by a small nucleus of close advisers and a smallelite of party bosses led by Ze Dirceu, who surrounded Lula and encouraged his personalistand increasingly authoritarian centralized leadership. Programmes were no longer open toserious debate. The party programme, everyone was told, was what Lula wanted in ordereither to run for office, or – subsequently – to win the campaign. Together with his coterie ofadvisers, Lula decided to form an alliance with the right-wing Liberal Party withoutconsulting anyone – let alone the mass base – concerning this strategic shift. The same grouprammed through a new social-liberal programme via its control of the full-time functionariesat the Party Congress just prior to the 2002 elections. Top-down personal leadership becamethe hallmark of the PT – a far cry from its earlier horizontal structure.

42. The shift to authoritarian political structures facilitated the repudiation of all of the PT’sremaining social reformist demands. Lula and his clique decided not to support the ALCAreferendum, despite the fact that 11 million Brazilians participated and over 95 per cent votedagainst ALCA. The neo-Lulistas saw the referendum as a threat to their alliances with thepolitical right and, more importantly, their rapprochement with the White House of PresidentGeorge W. Bush.

43. As the traditional PT programme was discarded and Lula’s opening to the right deepened, hisadvisers increasingly projected the image of Lula as ‘the man of the people’, the‘compassionate Northeasterner’, the ‘metalworker president’. Lula played the dual roles ofneoliberal and ‘worker president’ to perfection: to the favelados he provided hugs, tears,handouts and promises. To the IMF he guaranteed budget surpluses to pay bondholders, thefiring of public sector employees and the promotion of agro-export elites.

44. Along with Lula, key advisers decided on the political alliances to promote Lula’s election.The strategy was to first consolidate control over the PT to ensure big-city support,concentrating power at the top and then moving to the neoliberal right to gain the support ofthe small towns and backward rural areas, and, more important, big business financing. To thisend, Lula selected Alencar from the Liberal Party as his vice presidential partner. This broughtLula support both from a substantial minority of Brazilian business groups and from amongright-wing evangelical groups backing Alencar, himself one of the richest textile capitalists inthe country and no friend of the trade unions, least of all those employed in his textile mills.

45. Those familiar with the way the Bolshevik party in the Soviet Union changed after the deathof Lenin and the marginalization of Trotsky will need no reminding as to historical parallelselsewhere.

46. Antonio Palocci, the former PT mayor of Ribeiro Preto, a city in Sao Paulo state, coordinatedthe PT’s campaign platform and established solid links with the business elite. He was thePT’s top spokesman on economic policy during the electoral campaign and headed thetransitional team after the elections. Palocci also engineered the PT’s agreement with the IMFand was the architect of the orthodox monetarist and fiscal austerity economic policies. Lulalater appointed him as Finance Minister. As mayor of Ribeiro Preto, Palocci allied himself


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with the local business elite and capitalist sugar producers (Financial Times, 15 Nov. 2002, p.3). He privatized the municipal telephone and water companies and partially privatized themunicipal transport system. Apart from some low cost housing development, his neoliberalpolicies were uniformly negative for the poor. Crime rates increased, as did the inpatientqueues at local hospitals. As a result of Palocci’s reactionary policies, Lula barely won thepopular vote in Ribeiro Preto (in contrast to his 24-point national margin), a result likely torepeat itself in the next presidential election. Jose Dirceu, former President of the PT, has beenLula’s most influential adviser for almost decade, and has been the major force in engineeringthe transition from social democracy to neoliberalism. He was appointed chief of thePresident’s cabinet and he presides over the everyday affairs of the President’s agenda andappointments, as well as exercising disciplinary power over PT deputies and senators toensure that they vote the neoliberal line on appointments, legislation and priorities. Dirceu hasalready demonstrated his heavy hand in threatening to expel Senator Heloisa Helena forrefusing to vote in favour of former Bank of Boston CEO Henrique Meirelles as head of theCentral Bank, and right-wing Senator Jose Sarney as President of the Senate. The third closeadviser to Lula during the campaign was Marcos Lisboa, an orthodox liberal professor andstaunch monetarist. According to the Brazilian daily, Folha de Sao Paulo (22 Dec. 2002), hewas selected by Palocci to formulate Lula’s economic strategy. Lisboa is part of a large groupof neo-Lulistas who jumped on the presidential bandwagon in the last weeks of thepresidential campaign when it was clear that Lula would win. This inner circle is itself backedby a wider ring of neoliberal senators, governors and mayors who are deeply allied withbusiness interests and who promoted privatization policies.

47. As in the case of Britain where Tony Blair’s neoliberal pro-imperialist ‘New Labour’ replacedthe traditionally social democratic Labour Party, likewise Lula’s orthodox neoliberalstrategists have created a ‘New Workers Party’ without either social content or democracy.

48. Lula appointed a former President of a US multinational investment bank (Fleet BostonGlobal Bank), Henrique Meirelles, as the head of the Brazilian central bank. Meirelles notonly supported Cardoso’s orthodox neoliberal agenda, but also admitted to voting for JoseSerra, Lula’s opponent in the presidential election. The Finance Ministry is in the hands oforthodox neoliberal Antonio Palocci, and as head of the Trade and Development Ministry Lulaappointed Luiz Fernando Furlan, millionaire chairman of the agricultural company Sadia.Lula extended the reach of the right yet further by reappointing Cardoso’s supporter GilbertoGil as cultural minister, PT former governor of Brasilia, Cristovan Buarque, a strong advocateof privatization, as Education Minister, and Cardoso’s former ambassador to the US, CelsoAmorin, as Foreign Minister.

49. To ensure that neoliberal policies are implemented, Lula da Silva is pushing a constitutionalamendment that will make the Brazilian central bank more responsive to foreign investors andbankers by making it ‘autonomous’, or ‘independent’ of the national legislature and President.This is exactly what the British Chancellor of the Exchequer, Gordon Brown, did after ‘NewLabour’ was elected to power.

50. To pacify the centre-left of the PT, Lula appointed a number of officials to ministries who willbe largely impotent, given the tight fiscal and monetary policies imposed by Lula’s big-business economic team. By co-opting the left to the marginal ministries Lula hopes to deflectpopular tensions and to cultivate illusions among the leaders of the social movements that hisis a ‘balanced’ regime. For the seven trade unionists, four women and two blacks in thecabinet, upward mobility outweighs concerns about neoliberal policies. Though many of theleft PT had doubts about Lula’s alliance with the hard neoliberal right, including electoralpacts with ex-President Jose Sarney, and the corrupt ex-Governor of Sao Paulo OrestesQuercia and Paulo Maluf, they continued to describe the Lula regime as a government ‘inpermanent dispute and tensions’, without a fixed direction. Blinded by the presence of formerleftists in marginal cabinet posts, they overlooked the deep structural and policy ties of the keyeconomic and foreign policy makers.

51. Between Lula’s election and inauguration, therefore, his neoliberal advisers assured theUnited States government that the Free Trade Area of the Americas (ALCA or FTAA) was aframework for negotiations. Three weeks after Lula’s election, Peter Allgeier, deputy US traderepresentative stated ‘We will be able to work with the new [Lula] administration on trade


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issues across the board in the World Trade Organization, in the FTAA, and bilaterally. I feelvery positive after having spoken to a number of people associated with the upcomingpresident’ (Financial Times, 22 Nov. 2002, p. 4). Immediately after being elected the Lulateam was already laying the groundwork for close economic ties to US imperialism, a pointmissed by many of the Brazilian left intellectuals like Emir Sader who continued to praiseLula’s nationalist foreign policy (Punto Final, Dec. 2002, p.2). A few weeks before hisinauguration, Lula met with Bush in Washington where the two leaders agreed to a tradesummit for Spring 2003. In addition Lula also met with US trade representative RobertZoellick to discuss how the co-chairs of the negotiations on the ALCA could expedite itsimplementation (Financial Times, 22 Jan. 2003, p. 12).

52. There is only one figure as closely connected as the President is to the federal government’sflagship Fome Zero – the Zero Hunger programme: Carlos Alberto Libânio Christo.Universally known as Frei Betto, the liberation theologian and President’s senior adviser cameto prominence as one of Brazil’s leading intellectuals during the later years of the militarydictatorship. Since 1 January 2003 he has been the coordinator, alongside Oded Grajew, of theZero Hunger Programme’s ‘Social Mobilization’ task force. This programme has been themajor ideological ploy used by Lula – Betto, by all accounts, actually believes in it – to put acaring face on his neoliberal policies and to win over the left. His success in this regard isevident from the appreciative endorsement by Burbach [2003], who stated that ‘[t]o Lula’scredit he has stood by his commitment to tackle the hunger and malnutrition that afflicts over30 percent of the country’s population. On his first day in office he launched the anti-hungerprogram, known as Fome Zero.’ On the ideological dynamics of Fome Zero, see Madarasz[2003].

53. While the left PT objected verbally, they eventually swallowed da Silva’s decisions, since theyhad no recourse, no chance of changing the selection since the issue was never discussedoutside of Lula’s coterie. Dirceu, Palocci and their regional party allies then proceeded to formpolitical pacts with centre-right and right-wing parties all across the political map, in differentstates of the country. In some cases, the national leadership’s pacts with the right underminedlocal PT candidates, leading to the loss of several governorships. What is clear from theseelectoral alliances with right-wing parties is that they were not ‘opportunist’ moves or merelyelectoral tactics. Rather, the alliances coincided with the neoliberal ideology within Lula’sinner circle and among key sectors of the PT’s congressional representatives. The new right-wing allies plus the recently recruited neo-Lulistas in the PT served as a counter-weightagainst the left wing of the PT, further reducing their influence in the party and on thegovernment.

54. The overwhelming control of the PT leadership was manifest in the first meeting of theNational Directorate after the election of Lula on 16 March 2003. Three proposals were putforth for approval. The neoliberal resolution supporting the right-wing political economiccourse of the Lula regime received 70 per cent of the votes (54 votes), the left dissidentproposals received 28 per cent (21 votes), and there were two abstentions. The resolutionexplicitly imposed in doctrinaire fashion the arguments and logic justifying the neoliberalpolicies of the regime, establishing the theoretical and practical reasons for the adoption of theneoliberal strategy (monetarism, adjustments, etc.). It affirmed that the pro-business policiesand support for the IMF were not tactical but principled positions. That meeting also reflectedthe consolidation of control of the party apparatus and the almost total marginalization of theleft tendencies. The resolution, the meeting and the vote left little doubt that there wasabsolutely no hope of reforming the party from within, or pressuring the leadership to make a‘left turn’. Staying in the PT means supporting the party of the IMF, George W. Bush, ALCA,the enemies of Venezuela’s President Chavez, and joining border patrols with Colombia’sparamilitary president Uribe – an indefensible position, at least from a popular leftistperspective. Lula’s opposition, in contrast, is ideologically, strategically and tacticallyimpotent and disoriented. Unwilling to embrace Lula’s radical ‘redefinition’ of the ‘reformist’programme (from social welfare to orthodox neoliberalism), they search for a new strategyand programme. Some of the grassroots social movements have narrowed their horizons,setting aside their opposition to Lula’s general embrace of the pro-imperialist agenda, and arenow in favour of seeking ‘sectoral reforms’, such as agrarian reform and urban programmes


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for the favelados. Even in adopting these ‘sectoral strategies’, however, the opposition haslowered its demands below the original proposals, in an effort ‘realistically’ to adapt to Lula’sbudget cuts and full compliance with foreign creditors.

55. ‘This council’, Lula argued, ‘is not a friends’ club. I am not interested in knowing the partyaffiliation [sic] of the members of the Council or for whom they voted. What interests us isthe competence, the capacity, their talent and knowledge to think for their country’ (Tiemposdel Mundo, Dominican Republic, 20 Feb. 2003, p.7).

56. For details of this, see the Financial Times, 16 Jan. 2003, p. 2.57. See ‘Lula at Davos’, the Financial Times, 27 Jan. 2003, p. 2.58. For this policy, see the Financial Times, 16 Jan. 2003, p.2.59. Accordingly, ‘premature’ welfare spending, raising the minimum wage, extensive poverty

programmes and agrarian reform would all ‘destabilize’ the economy, undermine ‘marketconfidence’ and intensify the crisis, thereby worsening the condition of the people (seeTiempos del Mundo, Dominican Republic, 20 Feb. 2003, p. 7). In regard to the minimum wageLula’s government even rejected the proposal by the right-wing opposition that it should beraised to reais 260 (US$87) a month, raising it to reais 240 (US$80) instead.

60. For details of Lula’s budget cuts, see the Financial Times, 11 Feb. 2003, p. 66; La Jornada,11 Feb. 2003.

61. Apart from these IMF-mandated social cuts UNICEF has criticized the lack of specificmechanisms to prosecute the war against hunger and bring about a state of ‘zero hunger’. TheLula regime, UNICEF notes, does not even have in place measures to implement the schoolfood programme of previous years.

62. It was reported in the Miami Herald (13 July 2003) that Lula had committed to repay US$43billion of the external debt in 2003, which amounts to 75 per cent of anticipated exportearnings. It scarcely seems necessary to add that his budgetary policies will deepen Brazil’sinfamous inequalities, not reduce them, as millions of minimum wage workers will see theirmeagre incomes and social services decline. Equally certain is the fact that such cuts ingovernment spending will not provide any stimulus to the economy, but much rather deepeneconomic recession.

63. See the Financial Times, 16 Jan. 2003, p. 2. Dogmatic belief in the virtues of foreign capitalas the engine of growth blinds the Lula regime to the precariousness and vulnerability of theirstrategy of tying Brazil’s development to international financial capital. For example, duringthe last week in January 2003 the Brazilian currency (the real) lost 10 per cent of its value,reversing gains over the previous three weeks. The yield spread of Brazilian bonds over UStreasury bonds widened by 2 per cent to over 14 per cent. Domestic austerity is not enough tocompensate for international tensions. In effect, by adapting the neoliberal agenda andfinancial dependence, Brazil will follow one austerity policy after another, or a situation ofausterity without end. The Central Bank will be forced to raise interest rates further to attractspeculative capital, much to the detriment of national industry and agriculture. As in everyother economic policy area, Lula has consistently reversed positions. When he was elected hepromised lower interest rates. During the first days in power, the Central Bank raised interestrates from 25 per cent to 25.5 per cent and one month later (19 February 2003) raised them to26.5 per cent, thus damaging economic recovery and national investment. In recent monthsLula has pursued such a severe austerity policy in order to placate the IMF that his predecessor– Fernando Henrique Cardoso, himself no stranger to these policies – was driven to askwhether that much austerity was really necessary.

64. With the unquestioned backing of President Lula and the rest of the economic team, Palocciannounced the privatization of four state banks, the ‘privatization’ of the Central Bank (underthe pretext of autonomy from elected officials) and the promotion of a law that guaranteesforeign capital 100 per cent control of a substantial sector of Brazil’s telecommunicationindustry. Faced with the failure of AES, the US power company, to meet payments on itspurchase of Electropaulo – a power distributor in Sao Paulo City – Lula’s economic ministersrefused to re-nationalize the company, despite its glaring financial mismanagement (FinancialTimes, 26 Feb. 2003, p. 15).

65. See the Financial Times, 18 Feb. 2003, p. 4. In February, Lula eliminated price controls on260 pharmaceutical products and promised to liberate 3,000 medicines from price controls in


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June 2003.66. On these points, see Cesar Benjamin, Caros Amigos, March 2003. 67. See, for example, Mario Maestri ‘Sem Luz no fim do tunnel’, La Insignia, 4 March 2003.

Pointing to the recession in the first two quarters of 2003 (the GDP contracted 0.8% fromApril to June) the Financial Times (August 20, p. 13) calculates that economic growth in 2003‘is unlikely to be more than 1%’ and that in 2004, because of the regime’s failure to attractFDI (down from US$32 billion in 2000 to US$16 billion in 2002 and US$8 billion in 2003),despite Lula’s best efforts in this regard, the national economy is likely to contract in 2004,perhaps as much as 3%. This prediction is based on news that domestic car sales in 2003, fromJanuary to June, fell by 37.6% (Financial Times, 22 July 2003, p. 2). This statistic reflects thedramatic decline in purchasing power over the year (15% over the previous year), a steadyincrease in the rate of unemployment (12.8% in July and over 13% for the first six months)and the fall in per capita income (13.4% from June 2002 to June 2003). To offset this declinein purchasing power and the domestic market Lula’s economic team are pushing hard toexpand exports by providing exporters preferential loans and exempting them from a host oftaxes. Indeed, a growth of 33% in exports is predicted for the year (Financial Times, 2 July2003, p. 2).

68. See the Financial Times, 26 Nov. 2002.69. The CUT, the left labour confederation, with close ties to the PT, particularly Lula, had

numerous leaders elected to Congress and some are ministers in the regime. So far few, if any,have voiced criticism of Lula’s right turn. The CUT itself, though claiming 15 millionmembers, has been largely bureaucratized, with a large staff, and is dependent on statefunding. The CUT’s power of convocation is very limited, and no more than a few thousandturn out for major protests. From the beginning of the Lula regime, the CUT leadership hasadopted a double discourse. Shortly after Lula’s election, the CUT was invited to discuss thenew regime’s ‘Social Pact’ to reduce pensions, postpone wage and minimum wage increasesand to weaken the financial basis of trade union funding. The CUT leadership declared itsindependence from the government but agreed to continue to participate in the Social andEconomic Council, even though businesspeople and bankers outnumbered the trade unionists.Subsequently the CUT continued to criticize the harsh neoliberal budget cuts and reactionaryreallocation of funds favouring local and foreign bondholders, while continuing – somewhatperversely – to support the Lula regime. The CUT’s servility to the latter is a continuation ofthe negotiating posture it has adopted with previous neoliberal regimes, in part because of itsdependence on government subsidies. In addition, there are strong structural ties to the PT viathe ex-CUT officials currently serving in the regime, and the promise of future positions ingovernment, or inclusion on the list of deputies for the next Congressional elections. Finally,there is the structure of the CUT; its leaders and staff have been running the unions in verticalfashion for over a decade, marginalizing militants, and are consequently wholly incapable oforganizing the vast army of unemployed and under-employed. The results are evident fromthe poor CUT turnout in any major protest demonstration regarding ALCA, the IMF, or toprotest against the rash of privatizations that took place under Cardoso. Having demobilizedits membership for over a decade, the CUT leadership was not able to put more than a fewthousand in the street – and most of those CUT members present were mobilized largely bymilitants from PSTU, PC do B and the left wing of the CUT. Leaders of the MST have toldone of the authors of this article (Petras) that the progressive sectors of the Catholic Churchcan now mobilize more people than the official leaders of the CUT. What confuses outsideobservers of the CUT, however, is the fact that its leaders still show up to make speeches orsign declarations in favour of radical demands, giving the impression that it is still a radicalmass trade union. Despite the harsh anti-labour legislation envisioned by the Lula regime,there are few signs of active opposition from the official leadership, though by early March2003 many class-conscious trade unionists were expressing shock and anger at what they nowclearly perceived to be Lula’s pro-business partisanship.

70. See the Financial Times, 26 Nov. 2002, p.8.71. Quoted in the Financial Times, 27 Jan. 2003, p. 2.72. See the Financial Times, 27 Jan. 2003, p. 2. 73. As pointed out by researchers at the Instituto del Tercer Mundo (Guía del Mundo, 2000/2001),


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an NGO watchdog system aimed at monitoring commitments made by governments at theWorld Summit for Social Development, Brazil is the country with the ‘highest index ofincome concentration’ in the world and, they add, this disparity ‘has increased systematically’.Today, ‘it is much higher than in the first half of the1980s’. In fact, it is the worst case ofwealth concentration in Latin America, and in the countryside this gap is based on a grosslyskewed pattern of landownership. In rural Brazil, therefore, 2.8% of proprietors have 56.7%of the land, leaving 62.2% of landholders with less than 8%; a landowner in Curatiba owns4.5 million hectares, one of the largest agrarian properties in the world. The point is that theLula regime has not made an issue of this unequal distribution of wealth and property, norpursued any policies with the object of changing the concentrated structure of land ownership.

74. On these points, see Luiz Ignacio Lula da Silva, ‘Political realism doesn’t mean we ditch ourdreams’, The Guardian (London), 12 July 2003.

75. In Latin American intellectual and policy-making circles the term ‘new economic model’generally connotes the World Bank’s ‘Structural Adjustment Programme’ of policy reforms,designed to integrate countries all over the world into the ‘global economy’ and the ‘newworld order’. On the dynamics of this process see Bulmer-Thomas [1996], Petras andVeltmeyer [2001a; 2001b], and Veltmeyer and Petras [2000].

76. The neoliberal model is clearly geared to the interests of those large capitalist enterprises,estimated at about 15 per cent of the total, that have sufficient productive capacity to competein the world market; in this model, the majority of enterprises, particularly those operated by‘los informales’and the peasantry are deemed as having ‘marginal productivity’and left to twistin the winds of global economic change. ECLAC’s neostructuralist/social liberal model(‘Productive Transformation with Equity’), however, allows for a broadening of the social basisof the production process, inclusive even of the large mass of peasants, who, given improvedaccess to society’s productive resources (land, capital and technology), can be converted intoproductive members of society, and as such a ‘social factor of economic development’.

77. On this point, see Financial Times, 17 December 2002, p. 3. As a spokesman for the largestmultinational commodity giants Rodriguez joins Monsanto, the international agricultural andbio-technology group engaged in a longstanding battle to permit sales of GM Roundup Readysoya seeds.

78. The profoundly exclusionary nature of the neoliberal state has been well documented: see,inter alia, Petras and Veltmeyer [2001a; 2001b; 2003a; 2003b], Veltmeyer [2002; 2003],Veltmeyer and Petras [2000], and Veltmeyer and O’Malley [2001]. At least 50 per cent of allenterprises, including peasant farms in the rural economy, are deemed to have insufficientproductive capacity to compete in the world market. In this connection, as noted above, theECLAC neo-structuralist (and socially liberal) model is less exclusionary.

79. The continued use by agribusiness enterprises of unfree labour [de Souza Martins, 1997] willin all probability continue unchallenged by the state, notwithstanding the Braziliangovernment commission [Government of Brazil, 2003] on the problem of slavery in Brazil.

80. See Financial Times, 31 Jan. 2003, p. 2.81. UNCTAD [2002: 16, 18] has calculated that in Mexico the rate of return on investments made

by multinational corporations in the manufacturing sector, which accounts for 80 per cent ofthe country’s exports in 1993, was in the order of 34.3 per cent (as against 12.7% in 1985).The source of these superprofits is evident if we compare the respective shares of thesemultinational corporations in national employment – 42.7 per cent in 1985 but only 17.9 percent in 1993. In other words, the rate of profit is inversely related to labour intensity or the useof labour-power in the production process. This study by UNCTAD also makes clear that therate of profit on invested capital – and there is no reason to think that Mexico is atypical inthis regard – correlates with what they define as the ‘transnationality index’ (= the degree ofintegration into the ‘global economy’). In this connection it is also relevant to point out thatin the case of Mexico 71.36 per cent of each dollar of foreign direct investment is eventuallytransferred back to corporate headquarters, according to CEPAL (see La Jornada, 13 June2003: 19). More generally, according to CEPAL, on direct investments in Latin America of$76 billion in 2002 the multinational corporations generated profits of $22 billion(www.jornada, unam.mx/023n1eco).

82. In the course of campaigning for the Presidency, Lula demanded and secured from the MST


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an unprecedented concession: the stoppage of all mass direct action – no land occupations, inother words – arguing that this would ‘play into the hands of the right’, ‘scare’ the middle classvoters, and cost him the elections. It was a reformist trap into which, unfortunately, the MSTfell. It stopped mass action and joined the electoral campaign, despite Lula’s reactionaryalliances and the clear hegemony exercised by pro-imperialist interests. In line with thisclimb-down, in its public pronouncements the MST substituted vague ‘populist’ statementsfor class analysis.

83. For evidence of this, see Folha de Sao Paulo, 9 February 2003. In June (Folha de Sao Paulo,26 June) it was reported that from January to June 580,000 had lost their jobs and that GreaterSao Paulo was home to 2.7 million unemployed, not a few of them displaced rural landlessworkers. On 3 July it was further reported (Folha de Sao Paulo) that the food baskets providedby INCRA under the government’s Zero Hunger Programme had been cut back, and nowcovered not three but one month’s basic needs for the 180,000 malnourished rural landlessfamilies.

84. As Rodríguez pointed out, ‘We cannot wait. We think as a social movement, not like agovernment.’

85. At the time of writing (September 2003), some nine months into Lula’s regime, there are 17MST leaders and activists in jail and more to come as the movement is progressivelycriminalized ([email protected]).

86. Bishop Balduino, President of the Land Commission of the Comissao Pastoral da Terra,reported on 14 August 2003 that from January to June some 8,492 families of asentados(landsettlers) were forcibly evicted. In Goias 92 families who had been living on occupiedland for seven years were pushed off the land under orders of a judge. With regard to furtheroccupations, Lula has asked the MST to be ‘calm’ and to respect the law – that landoccupations would prejudice the agrarian reform process (see O Estado de Sao Paulo, 3 July2003). But while Lula was negotiating with the MST, trying to convince them to end theirstrategy of land occupations, armed militias, estimated at 150 or so, working for the landlordswere terrorizing rural landless workers in Pontal do Paranapanema (Sao Paulo). An episodeinvolving 15 trained professional gunmen was actually televised.

87. Landowner-organized paramilitary ‘death squads’ are reported to be active in the states of SaoPaulo, Pernambuco, Minas Gerais and Parana, as well as Rio Grande de Sul. As happened inthe case of the Cardoso regime [Petras and Veltmeyer, 2003a], Lula’s government has madeno attempt to rein them in, or to require the police and the judiciary to take action againstthem; much rather the contrary. Hence Thomas Basto, Minister of Justice, has informed theMST that neither it nor the Fazendeiros are ‘above the law’ (see O Globo, online, 3 July 2003).But in practice the repressive apparatus continues to be heavily tilted against the MST. TheComissao Pastoral da Terra of the Catholic Church (‘Informe sobre las crimenes delLatifundia,’ 26 August 2003) documented the murder of 44 MST activists from January toAugust 2003, a figure that compares with the worst excesses of previous regimes (the yearlyaverage from 1985 to 2002 is 75). Again, landowner impunity is the rule. Among those whoordered the 1,280 killings over these years, only 14 were ever brought to justice and onlyseven were indicted.

88. See Jornal do Brasil, 3 August 2003.89. See O Estado de Sao Paulo, 3 July 2003.90. It is interesting to note, observes a reporter from La Jornada, that Lula continues to criticize

previous administrations for distributing land without technical assistance and credit eventhough his own regime has distributed scarcely any land.

91. It is significant that the idea that there really is no alternative to adapting to neoliberal policiesappealed most to ill-informed leftist intellectuals. By assimilating Lula’s right-wing policiesto a general leftist label, the Lulista ideologues threaten to draw the Brazilian left into line withthe neoliberal project of European ‘socialist’ and ‘labour’ parties, in effect emptying Brazilianleftist politics of its essential welfare and socialist content. There is a striking parallel in thisregard. The slogan ‘there is no alternative’ (abbreviated in popular discourse to ‘TINA’) wascoined by the government of Margaret Thatcher, the most reactionary conservative Britishprime minister since the Second World War, to justify her neoliberal policies. As in the caseof Lula, those ‘intellectuals’ whom she dazzled most were not her own right-wing idealogues


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(who were already persuaded by her arguments) but rather those on the UK left, many ofwhom accepted (and even celebrated) her claim about TINA. Again as in the case of Lula, theheir to the Thatcherite project came not from her own Conservative Party but rather from theranks of ‘New’ Labour, in the person of Tony Blair.

92. The Communist Party of Brazil (PC do B – the Partido Comunista do Brasil) participated inthe centre-left–right coalition that brought Lula to the presidency. From this position, it wouldseem that its aim ‘to have a complete notion of reality … not underestimating the enemy …and make a revolutionary use of democracy and reforms’ [Carvalho, 2003] has been seriouslycompromised. In this position it has been reduced to trying to ‘persuade the government [forexample] to remove from the draft project [on pension reform] sent to Congress their anti-social aspects’. Clearly any effective alternative political formation cannot at the same timebe connected to the regime in the vain hope of being able to exert some persuasive influence.

93. Millions of Brazilians have registered their opposition to every one of Lula’s policies. Thusthe anti-ALCA referendum was supported by ten million voters; of the 52 million who votedfor Lula, the overwhelming majority voted against the neoliberal policies, not for acontinuation and deepening of the same.

94. The concept ‘disorganized’ is, it must be stressed, not pejorative, and refers to grassrootselements whose attempts at mobilization have been undone either by the neoliberal project ofthe Lula regime, by the regime itself, or by the forces on the political right (e.g., armed deathsquads operated by landlords).

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