top of page

LAG Blog

Writer's pictureJessica Sklair

Let's celebrate Lula’s election, but we need to debate how Brazil’s left moves forward

Lula’s recent election to the Brazilian presidency saw the country’s left heave a collective sigh of relief. The profound threat that the re-election of Bolsonaro would have posed to Brazil’s constitutional order should not be underestimated. But this is not the time for complacency. In order to secure his first election victory in 2002, Lula famously wrote an open letter to the country’s business elites, vowing not to allow his government’s economic policy to stray too far from the neoliberal orthodoxy. Twenty years later, such pressures from the economic elite are equally strong, but they are now combined with a deeply hostile political climate in which the gains made by Bolsonaro’s political allies in the first round of this year’s elections will leave Lula with limited room for manoeuvre in congress. The tightrope that Lula has always walked has never been so tightly strung.


Lula speaking on São Paulo's Avenida Paulista after winning the second round of the Brazilian general election, 30th October 2022 (source: wikicommons)

In this challenging context, it is imperative that those on the left create space amongst themselves for political debate on how Brazil has reached this point, and on how to move forward. One aspect of the fallout from the extreme polarisation that has gripped the country in the run up to this election has been a refusal of many on the left to countenance any critique of Lula and the PT. This has been understandable in light of the urgent necessity of removing Bolsonaro from power, but it has also been dangerous in its tendency to shut down debate among Lula’s supporters. In the difficult journey that lies ahead for Brazil’s political left over the next four years, such debate will be essential to exploring ways in which Lula can use his new mandate to effectively work towards greater socioeconomic equality and social justice.


To stimulate this debate, we need to look back at the fourteen years of PT governance that preceded Bolsonaro’s election in 2018, and ask ourselves honestly what was achieved, what was not achieved, and why. Some of Lula and Dilma’s successes during this period were truly significant in their (albeit short lived) impact on structural inequalities, particularly in the introduction of progressive labour legislation and successive mandates for increasing the real minimum wage well above inflation. But the PT’s approach to social policy was based on a wager with the processes of financialisation that were, at this time, already becoming deeply embedded in the workings of Brazil’s wider economy.


The PT’s financialised approach to social policy saw the introduction of state subsidies for privatised services in areas such as education and health, alongside the provision of new lines of credit to help users pay for them. Public housing policy under Lula and Dilma mirrored this approach, as exemplified in the PT’s Minha Casa Minha Vida housing programme, described by Raquel Rolnik (University of São Paulo Professor of Urban Planning and ex-UN Special Rapporteur on adequate housing), in her book Urban Warfare: Housing Under the Empire of Finance. In parallel, Lena Lavinas (Professor of Welfare Economics at the Federal University of Rio de Janeiro) has explored the central role played in the financialisation of social policy by the rollout of the Bolsa Família, Brazil’s internationally acclaimed conditional cash transfer programme. As markets for privatised social services grew under PT rule in Brazil, the Bolsa Família served as state-funded collateral for families to access these services on credit, a situation Lavinas has termed The Brazilian Paradox. Across these different areas of social policy, the PT’s approach was characterised by the promotion of debt-based consumption of commoditised social services.


What were the effects of this financialisation of social policy? Many Brazilians undoubtedly had a little more in their pockets under Lula’s rule, giving them more opportunities for consumption. But this did little to improve public provision of the services that are essential to a dignified and healthy life - healthcare, education, housing, sanitation and water, public transport, etc. – leaving the majority of the population faced with the options of making do with scarce and low-quality services, or taking on debt to pay for privatised ones. The financialisation of social policy has thus contributed to staggering growth in the debt-to-income ratio seen among Brazilian households. Debt levels began to rise during the early years of the PT’s administration and have climbed steadily since then (with the exception of the period of Brazil’s economic recession from 2015-16), with the Central Bank of Brazil reporting an estimated 85 million Brazilians in debt in late 2019.


The reality offered by the PT’s social policy reforms was, as such, far from one of radical socioeconomic change in which Brazilians could seriously imagine a future of significantly reduced inequality and greater social and economic justice. On the contrary, the seeping of financialisation into the realm of social policy has helped line the pockets of corporate shareholders and financiers, while miring millions in ever-increasing levels of debt, ultimately doing more to reinforce the structures of socioeconomic inequality that have long defined Brazil than to challenge them. In the run up to last month’s election, Lula did address the issue of rising indebtedness through a pledge to renegotiate debt on behalf of Brazilian households in default on their repayments. But without addressing the underlying reasons for indebtedness, debt renegotiation ultimately serves only to reboot debt-based financial systems, temporarily reducing default rates and paving the way for future expansion of credit and debt cycles. To really create long-lasting shared prosperity, the left must rethink its enthusiasm for the financialisation of social policy.


This, of course, is easier said than done for a government under the watch of a national elite whose interests have been strengthened by the last six years of orthodox neoliberal reform. But Lula’s return could at least create space for an urgent debate on the future of social policy, and the chance to reverse the creeping hold of financialisation and rising debt over the lives of millions of Brazilians through a serious commitment to expanded state provision of essential public services. Whether or not Lula and those surrounding him have the will or political capacity to seize this chance remains to be seen.

94 views0 comments

Comentarios


bottom of page