Transforming Brazil

A History of National Development in the Postwar Era

Rafael R. Ioris

• Publisher: Taylor & Francis
• Year: 2014
• Print ISBN: 9781138651500
• eBook ISBN: 9781317680024
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Political History & Theory
• Index: Politics & International Relations

In this book, Rafael R. Ioris critically revisits the postwar context in Brazil to reexamine traditional questions and notions pertaining to the nature of Latin America's political culture and institutions. It was in this period that the region lived some of its most intense and successful experiences of fast economic growth, which was paradoxically marred by heightened ideological divisions, political disruptions, and the emergence of widespread authoritarian rule.

Combining original sources of political, diplomatic, intellectual, cultural, and labor histories, Ioris provides a comprehensive history of the fruitful debates concerning national development in postwar Brazil, a time when the so-called country of the future faced one of its best moments for consolidating political democracy and economic prosperity. He argues that traditional views on political instability have been excessively grounded on an institutional focus, which should be replaced by in-depth analysis of events on the ground. In so doing, he reveals that as national development meant very different things to multiple different social segments of the Brazilian society, no unified support could have been provided to the democratically elected political regime when things rapidly became socially and politically divisive early in the 1960s.

Innovating in its multidimensional analytical scope and interdisciplinary focus, Transforming Brazil provides a rich political, cultural, and intellectual examination of a historical period characterized by rapid socio-economic changes amidst significant political instability and the heightened ideological polarization shaping the political scenario of Brazil and much of Latin America in the Cold War era.

1
State Planning and National Development

Political Devices for Turbulent Times

Introductory Notes

The 1950s in Brazil were characterized by rapid transformations amidst rising ideological polarization. The country witnessed high rates of economic and demographic growth, fast-paced urbanization, sustained industrialization, and the creation of an ever expanding consumer market within a context defined, however, also by continued social exclusion and persistent insufficiencies in the areas of infrastructure, education, and public health. Protracted socio-economic challenges notwithstanding, these were years of abundant intellectual, political, and cultural innovations developed essentially on the basis of the persistent search for a new historical course for the nation. This was process that had begun in a less consistent fashion late in the 1930s, when Brazilian society started undergoing profound institutional and socio-economic changes.

Leading the way, the federal government deepened the path of industrialization, expanded and professionalized its own bureaucratic structure, and gradually opened up the realms of urban political participation. Socially and culturally the country experienced the enlargement of middle-income sectors, mostly tied to the activities of the central government and burgeoning industrial initiatives, and the rapid growth and intense mobilization of urban industrial labor. In fact, though still largely defined by the corporatist framework created under the dictatorial regime known as “Estado Novo” (1937–1945), the industrial expansion of the time helped foster a better organized and ever more active workers movement that consistently pushed the boundaries of the legal and political systems.

World War II proved to be another important turning point in the recent history of the country, particularly at its aftermath when Brazil faced the challenge of moving beyond the experiences of authoritarian rule while sustaining the socio-economic achievements of the preceding years. Brazil was Latin America’s most actively involved nation in the Allied war effort. The country provided important raw materials, logistical support that included the temporary cession of territory for military installations, and personnel to European operations coordinated by the U.S. military. Moreover, the concern about a protracted global war had convinced even its more reluctant political leaders that their country had to be more assertive in the goal of state-supported industrialization given the heightened risks of not having a national industrial base amidst a global economic blockade. In the end, despite the human cost involved, overall the country benefitted from its participation in the war, and Brazil’s most important postwar industrial complex (and Latin America’s largest steel mill), the Companhia Siderúrgica Nacional (CSN) was, in fact, a direct result of the country’s close alignment with United States.

When postwar economic and political reconstruction got underway Brazil became an active participant in some of the most important newly created agencies and institutions of the UN system, providing enthusiastic diplomatic support for the cause of global economic liberalization. In the immediate postwar years the national economy was indeed in a privileged economic position given the large amounts of accumulated foreign reserves from exports associated with the war effort. These economic assets would be soon depleted, however, by rising levels of manufactured imports, a trend clearly indicative of the long-term structural weaknesses of an economy still marred by deep inefficiencies in the areas of energy production and transportation.

These shortcomings posed serious difficulties for the continuous growth that ruling elites increasingly saw as a sine qua non condition for sustaining the controlled path of economic inclusion that had taken place in the preceding years.¹ The challenge of delivering high rates of growth while responding to the growing mobilization of urban working- and middle-income groups within an increasingly complex and culturally diverse society therefore defined much of the developmental experiences of the 1950s in Brazil. It was amidst this changing, often-turbulent general scenario that one of the most promising periods of growth, political stability, and social inclusion in the history of the country unfolded.

In order to start assessing these many complex historical dynamics, the present chapter revisits the established literature on economic development promotion in Brazil and reconstructs the domestic political environment of the country. It begins by examining the role of the national state in the main developmental efforts conducted in the transformative years of the 1950s. In fact, no longer determined by the authoritarian laws of the Estado Novo, the mid-century political order was nonetheless largely defined by limited socio-economic inclusion and the persistent tutelage of a corporatist state apparatus and political logic still at work.

Industrial Promotion and the Persistent Role of the Federal Government

Significant state and private investments recently made in different areas of industrial activity notwithstanding, in the aftermath of World War II the Brazilian economy was still fundamentally defined by produce-exporting activities and the country remained largely dependent on coffee exports for obtaining convertible currencies used to purchase foreign manu factured goods.² Complicating matters further, the country faced growing challenges from the larger availability of agricultural goods offered in ever more integrated global markets defined by declining commodity prices. Coffee exports represented about 62 percent of all foreign trade revenues obtained in 1950, and throughout the entire decade these sales amounted to at least half of all gains associated with foreign trade, the intense price fluctuation of the time notwithstanding.³ In fact, even though in its first years the Korean War helped push global commodity prices upward, by the end of the decade Brazil faced tremendous difficulties in obtaining the strong foreign reserves needed to support its balance-of-payment accounts. These problems were also grounded in the mid-decade, politically driven commercial boycott implemented by the U.S. Congress against Brazilian coffee exports, as well as on the rapid decline in global prices occurring in the second half of the decade.⁴

The importance of coffee exports for the mid-century economic soundness of the country was such that even the Kubitschek administration (1956–1961), despite being primarily focused on implementing an ambitious agenda of industrial development, was regularly forced to subsidize coffee production in the form of price guarantees and the purchase of significant portions of the annual harvests in order to stabilize global prices. Indeed, expenditures associated with coffee policies carried out in the second half of the decade amounted to the staggering figure of an estimated total of about 8 percent of the country’s GDP.⁵ Aggravating the situation, international prices dropped to the lowest levels of the decade in 1958 and the International Coffee Study Group of representatives of Latin American and African producers decided to set quotas for upcoming harvests—a decision that reduced, for the first time, the Brazilian share of global production to below 50 percent.⁶ Thus, though decreasingly influential, the historically powerful large coffee growers of the southeastern portion of the country continued to hold considerable political power over the nation’s decision-making process, forcing JK to take these interests into account while deploying his ambitious industrial plans.⁷

Such a challenging economic scenario defined by growing trade and balance-of-payment shortfalls was to become one of the main structural reasons behind the fact that promoting accelerated growth by means of fast-paced industrialization would become a central political theme in the 1950s. It should be noted, however, that though pursued in a less assertive and coordinated fashion, the goal of industrialization had shaped broad socio-political, economic, and even cultural dynamics in Brazil even before the developmentalist years of the 1950s.⁸ It is worth recalling that the authoritarian Estado Novo had been at least partially justified in the expediency of imposing the needed political stability required for promoting a profound reordering in the country’s economy.⁹ The regime had been put in place when Vargas—who had come to power in 1930 based on a platform of traditional Latin American liberal political reforms typical of the first quarter of the century (i.e., fair elections and restricted recognition of labor unions) implemented a “self-coup” in November 1937 that forcefully closed the doors of the national congress, imposed widespread censorship, and centralized political rule. Coherent with its corporatist nature, the regime set up the first national labor legislation granting rights to urban organized workers while, at the same time, placing unions under the strict control of the federal government. These intricate political strategies provided the basis for the dissemination of a new pro-industrial outlook among relevant portions of political and economic elites, thus paving the way for the major industrial jump of the 1950s.

Given its historical relevance, the process of industrialization and its impact on the construction of a modern state apparatus has become one of the most relevant topics of study in the vast political literature on twentieth-century Brazil. Following either an economic or a sociological approach, classic examinations stress the role that the federal structures of government played in promoting the goal of fast industrialization, particularly after the 1930s.¹⁰ Supplementary in-depth historical analyses alternatively identified the private, commercial, and even agricultural origins of the capital accumulation process supporting some of the first manufacturing units being created in the late nineteenth and early twentieth centuries.¹¹

Political investigations on the state’s participation in these complex historical events, particularly in the mid-twentieth century, have also been regularly advanced. From an early state-centered perspective, which emphasized the alleged autonomous capabilities held by the federal government, additional studies have shown the important role private agents played in the process.¹² How the central government may have influenced the course of development promotion in what have been defined as “late, late-comers” (i.e., peripheral economies that pursued fast-paced industrialization in the middle of the twentieth century, in contrast to what late-comers such as Germany, Russia, and Japan did at the end of the nineteenth century)¹³ also merited attention from the specialized literature trying to make sense of the shortcomings of this delayed historical experience.¹⁴

As indicated above, in Brazil, deepening the path of substitutive industrialization in the 1950s was closely associated with the need to address persistent economic deficits.¹⁵ Even the market-oriented administration of Eurico Dutra (1946–1951) was eventually forced to reintroduce government regulations in order to tackle the deteriorating economic conditions of the late 1940s. To be sure, starting in 1946, Dutra’s market friendly economic advisors (who included the influential economics professor Eugênio Gudin) eliminated all war-time restrictions on imports assuming that the foreign reserves accumulated in the preceding years would be able to sustain a new period of liberal (market-based) economic growth. The administration believed that the promises for reorganizing the global economy along the lines of the liberal principles set out in the Bretton Woods Accords would be translated into effective economic assistance to developing nations such as Brazil. Market-friendly cabinet members had hoped that a flexible exchange rate approach would serve to attract needed foreign sources of capital and that the promised elimination of the limits on coffee prices paid in the U.S. market would be able to compensate for eventual losses caused by rising imports.

These initial optimistic expectations were quickly dashed in the second year of Dutra’s presidential term, when he was forced to impose the first of a series of legal restrictions on imports in order to balance surging trade deficits. Foreign reserves had been depleted at a faster rate than anyone had expected and the assistance promised from the U.S., particularly in terms of public finance to support the goal of overhauling the infrastructure of the economy, never materialized.¹⁶ As the confidence in the multilateral order set by the U.S. after 1945 rapidly faded, Brazil faced a growing balance-of-payments crisis. Given the heightened need to curb imports while also addressing the mounting problem of inflation rates, in lieu of devaluing an artificially high exchange rate of the Brazilian Cruzeiro, Dutra’s administration instituted new regulations on the volume and type of imports. Though unintended, these measures helped foster the early stages of the path of industrialization consolidated in the 1950s, as sustaining an over-valued exchange rate and imposing growing legal restrictions on imported manufactured goods were key elements of the industrial policies pursued in the ensuing years.¹⁷ Additional conceptual contributions during these early years of the postwar scenario to the goal of industrial promotion included the two investigative commissions created in a joint-effort between the governments of Brazil and the U.S. in order to find possible ways of improvin...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Acknowledgments
• Introduction: Brazilian Development in Historical Perspective
• 1 State Planning and National Development: Political Devices for Turbulent Times
• 2 Development in a Global Perspective and Brazil’s International Search for a New Historical Course
• 3 The Targets Plan and the Council of Development: The Technocratic Path to Development Promotion
• 4 The Higher Institute of Brazilian Studies versus the Technocrats: Development as State-Led Social Inclusion or as Market-Based Policies
• 5 Economic Prosperity, Consumerism, and the Business World: Development as Market-Led Growth
• 6 National Development and Industrial Labor: Metalworkers, Carestia, and the Basis for a Popular Path of Development
• Conclusion
• Bibliography
• Appendix: Specific Goals and Achievements of the Targets Plan
• Index