Brazil and Globalism:
The Squid on a Rising Tide

Introduction

“Globalization” is a term that is used by many people in different ways, often focusing on one aspect of a phenomenon that has many dimensions. In the larger sense, however, it refers to the set of interrelated and simultaneous processes operating on a worldwide scale that are increasingly integrating economic activity, interlinking political institutional and movements, and blending cultures toward a global system, an end state called “globality.”

“Globalism,” too, is a term that is used in different ways. Manfred B. Steger employs it to describe a political-economic ideology, an interpretation of the globalization process that serves to legitimate the neoliberal agenda of shaping that process in a particular way to achieve a particular end (Steger 2002).*

Just as Marxism is ideology of the “have-nots” that seeks to empower them to have something, globalism is the ideology of the “haves” that enables them to have even more. But as obvious as are the contrasts between neoliberal globalism and Marxism, even more startling is the similar nature of their claims to “historical inevitability.” They are alike in their hard-edged deterministic interpretation of a universe that is also probabilistic and uncertain. They are mirror images of each other, the black and white extreme worldviews of a world that is mostly shades of gray and a spectrum of color.

Neoliberal Globalism: A Rising Tide or the Perfect Storm?

In the view of Steger, what is problematic about globalism is that it serves to empower the already powerful; that it perpetuates and even accentuates power asymmetries and social injustices rather than mitigates or alleviates them; that it raises up competition as the noblest human activity to the disparagement of cooperation; that it elevates machine-like efficiency as a deity to the of the detriment of human compassion; that it prizes the pursuit of personal wealth over the promotion of the common good.

The free-market ideology is free of any moral anchor other than Gekko’s commandment, “Greed is good.” Societal goods, unlike material goods, cannot be sold at some equilibrium price, and therefore are held to have no objective reality. Serene in its assurance of empire over matter, it sees no reason to critically examine its assumptions. The cargo cult of free-wheeling capitalism believes in a wealth-generating perpetual-motion machine, world without end. It trusts entirely in the mechanics of mathematically modeled system to maintain its own stability, as a gyroscope, while the neoliberal agenda spins the world faster, ever faster. This blind faith in the “invisible hand” refuses to acknowledge, let alone to investigate, possible signs that the system is in danger of flying apart or spinning out of control.

As an ideology, globalism makes a number of claims, but as Ira Gershwin said of the Bible, “It ain’t necessarily so:”

1. Globalization is about the liberalization and global integration of markets.

   This is only partially true. It treats only one aspect of globalization, ignoring the rise of international institutions, transnational organizations, cultural cross-fertilization, and the complex interdependence of these phenomena. In fact, three international institutions in particular, the International Bank for Reconstruction and Development (World Bank), the International Monetary Fund (IMF), and the World Trade Organization (WTO), have played an indispensable role in furthering economic globalization. Meanwhile, the ideological and political battle against globalism is primarily carried on by its critics who have formed countervailing activist transnational organizations. These transnational organizations are manifestations of antiglobalist globalization.

2. Globalization is inevitable and irreversible.

   A knowledge of the future would be required to prove the statement. However, a knowledge of the past is sufficient to cast doubt upon it. There have been eras of globalization in the past, and they have been reversed. The collapse of 19th century globalization led to the two World Wars and the Cold War. Since globalization has been reversed before, it is plausible to postulate that this could occur again. It should also be noted that Karl Marx made similar claims regarding the inevitable crisis in and collapse of capitalism, and the rise of communism. What reason is there to believe that globalist claims of historical inevitability are any more or less valid?

   It is noted with considerable irony that neoliberal economics treats the market as an ahistorical phenomenon, yet globalism as an ideology makes claims to historical inevitability.

3. No one is in charge of globalization.

   The statement is true as far as it goes. There is no universal “Minister of Globalization.” But the fact that no one is in charge does not logically imply that some ones are not in charge. The various agents of the Washington Consensus have worked tirelessly for decades to construct the environment in which their vision of globalization now flourishes. This has not come into being on its own.

4. Globalization benefits everyone.

   This claim flies in the face of neoliberal theory, which being founded on the principle of competition, mandates that there must be winners and losers. A worker, who is laid off when production is moved offshore, derives no benefit from cheap imports, since he can no longer afford to buy them.

   The neoliberal mantra that “a rising tide lifts all boats” is seductively metaphorical in its optimism. Giving this alluring metaphor closer inspection, however, it is clear that there are large and small boats, having varying degrees of seaworthiness. Neoliberals would have us believe that globalization is a force of nature, but a more accurate simile might be to liken their version of globalization to global warming, a human-created phenomenon that is profoundly affecting the forces of nature. Indeed, neoliberal globalization has unleashed “perfect storms” that have swamped many boats. The S.S. Mexico, the S.S. Thailand, and the S.S. Indonesia are just a few of the ships of state that have had to be bailed out. Navigation on the globalist high seas has hardly been a pleasure cruise.

5. Globalization furthers the spread of democracy in the world.

   Globalists claim that the economic process of liberalizing markets is in a push-pull relationship with the political process of liberal democracy. Such a complex and sweeping proposition cannot be easily dismissed. It is certainly true that there are far more democracies in the world today than there were a generation ago, when the current era of globalization was getting underway, and that both the processes of democratization and of globalization have accelerated since the end of the Cold War. However, simultaneity is not necessarily causality.

   Central to the neoliberal claim linking freer economic life to freer political life is the contention that the former necessitates smaller, less-intrusive government, which in turn enables the latter. This does not necessarily follow. It is not the size of government in and of itself, but the principles upon which it is founded and the extent to which practices them, that is determinative of the state of liberty of its people. Western Europe is replete with social democracies, large but permissive welfare states. On the other hand, there have been many small and repressive governments, delivering few services to the people, and allowing even less political participation.

The Brazilian Squid

Brazil has been “the country of the future” for the past 50 years, but has somehow been stuck in an economically moribund present. It is not entirely clear why its performance has been so disappointing, for it has by and large followed the neoliberal program prescribed by the IMF. Brazil has been characterized as a Switzerland inside of an India, a small, rich country inside of a much larger and poorer one. It has one of the highest levels of income inequality in the world. But while there is miserable destitution in some districts of Rio de Janeiro and other cities, in general the quality of life is not that low as compared with developing Asian countries. Education, public health, and life expectancy are on a par with the Asian “tiger economies.” It is just that Brazil was expected to be further along by now. (Banerjee 2002) In the world’s eighth largest economy, 45 million Brazilians (25% of the population of 175 million) live below the poverty line. The globalist tide has failed to lift the S.S. Brazil.

The stormy seas of global financial markets have now churned up from the deep a monster that neoliberals view with horror. Luis Inacio Lula da Silva took office as the president of Brazil on January 1, 2003. A long-time labor leader and fixture of leftist Brazilian politics, “Lula,” meaning “squid” in Portuguese, is a name he took in 1982 (O'Shaughnessy 2002).

Lula da Silva has been characterized as “an anti-American radical with an appetite for atomic bombs. He is a co-founder of the Sao Paulo Forum, a consortium of militant, often Marxist groups that huddles regularly.” (Murdock 2002) Former White House aide and Hudson Institute senior fellow Constantine C. Menges has said that Lula da Silva will bollix up the Brazilian economy even further with heavy-handed leftist reforms, and has warned that his relations with Venezuelan President Hugo Chavez and Cuba’s Fidel Castro could lead Brazil down the dark path toward terrorism and the formation of a Latin axis of evil aimed at the United States (Menges 2002).

Reporting from Sao Paulo, United Press International correspondent Carmen Gentile sees a very different Lula. “Talk of Lula forming unholy alliances with Chavez and Castro reeks of Cold War rhetoric and post-Sept.11 hysteria. This Lula--the Lula making his fourth, consecutive presidential bid--has tempered his attitude toward big business, formed alliances with parties on the right and on a whole taken a more even-handed approach toward moving Brazil into the 21st century.” (Gentile 2002)

Mr. Lula da Silva, who lost presidential bids on a populist platform three times, toned down his rhetoric during the 2002 campaign. Following his electoral victory, he worked to calm markets as he outlined an economic plan. Early indications are that after years of radical rhetoric and consorting with representatives of unsavory governments, the former metal worker has donned Thomas Friedman’s Golden Straitjacket in order to please the IMF and the Electronic Herd. During a speech at the National Press Club on December 10, 2002, the president-elect vowed to pursue free trade. “My new administration is going to be characterized by fiscal responsibility, the fight against inflation, and respect for contractual obligations and agreements. These form the basis for resuming sustained economic growth.” (Sparshott 2002)

The Electronic Herd hopes to see Lula da Silva reform Brazil’s labor laws, social security policies and tax laws, and maintain fiscal and monetary discipline. However, these reforms will require changes in the country’s constitution. Brazil’s former administration of Fernando Henrique Cardoso, which was generally favored by the market, never seriously took on any of these reforms. Although Mr. Lula da Silva is a former union leader and more outwardly populist than the previous administration, his party struck a key alliance with the centrist Democratic Movement Party, which gave it a congressional majority and the support of several governors. This alliance will be necessary for the kind of structural reforms necessary to placate investors. Also, Mr. da Silva’s modified budget and minimum-wage proposals are more conservative than were the policies of the Cardoso administration.

On the other hand, Lula da Silva cautioned during his National Press Club speech that talks on a hemisphere-wide Free Trade Area of the Americas (FTAA) would not be easy and would not be simply on U.S. terms. “I told President Bush we will be very tough, as tough as the Americans are in the negotiations, but when we come to an agreement, we will be loyal in our commitment.” In particular, Brazil has emphasized the importance of market access for its agricultural goods, claiming that U.S. agricultural tariffs are too high and subsidies too generous. (Sparshott 2002)

On January 26, 2003, the newly inaugurated President Lula da Silva addressed the World Economic Forum in Davos, Switzerland (Lula da Silva 2003):

Here in Davos, it is generally assumed that there is now only one god--the market. But free and secure citizens are one of the main prerequisites for a free market.

Brazil must promote agricultural reform and achieve a return to economic growth as a way to distribute income.

We are establishing clear, stable and transparent economic rules, and are implacably fighting corruption.

Our infrastructure must be developed, and this will involve foreign investment.

We need to make an extraordinary effort to expand our international trade, in particular our exports, diversifying into new products and markets, and adding value to what we produce.

We want free trade, but free trade that is reciprocal.

Any export efforts we might make will be worth nothing if the rich countries continue to preach free trade and practice protectionism.

The required changes in the world economic order must also involve a greater discipline in capital flows, which move around the world at the mercy of subjective rumors and speculation with no basis in reality.

This is hardly the ranting of a left-wing radical. It is a balanced agenda for reform. It addresses the need for reform on Brazil’s part in terms of its agriculture, economic rules, and rooting out corruption, as well as the need for reform on the part of those who preach free trade but practice protectionism. It is also a call for reform of the global capital markets to prevent stampedes of an undisciplined Electronic Herd.

Conclusion

Adam Przeworski has extensively researched the link between prosperity and democracy, and it has been said that once a democracy’s per capita income reaches a certain level, it essentially cannot be overthrown (Przeworski and others 2000). But the standard deviation in income distribution must be taken into account as well as the mean per capita income. Were Bill Gates to relocate his residence to South Central Los Angeles, the resulting rise in the area’s mean per capita income would be statistically dramatic, yet socially meaningless. Many commentators agree that a large, stable, and secure middle class is necessary to the maintenance of moderate politics. However, neoliberalism does not deliberate on the political role of the middle class. Rather, it praises and rewards economic winners, while it provides neither encouragement nor consolation to losers. It admonishes government to not afflict the comfortable, but does not acknowledge it a legitimate role in comforting the afflicted. It glorifies competition and efficiency as ends in themselves, and does not ask, “What price victory?” It is not enough for a government to guarantee the rights of the economic winners to enjoy the spoils of their victories. It must also guarantee that the losers do not lose so completely that they are effectively no longer players, but merely pieces on the board. To ignore or deny this function of government is a prescription for alienation and crime at best, and radicalization and revolution at worst.

It is exactly this uncompromising form of capitalism that Marx observed during the 19th century’s laissez faire globalization era, and which led him to conclude that capitalism had no future. Laissez faire globalization did little to spread democracy then, but in the wake of its collapse early in the 20th century arose monstrous totalitarian regimes, and the democracies that survived did so by adopting socialism to varying extents. Democracies survived at the expense of extreme capitalism, rather than by rigid adherence to it.

Three-quarters of a century later, with totalitarian socialism all but gone, economic liberalism came back with a vengeance, picking up where it left off before the First World War, and moreover, bent on reversing the creeping socialism that had enabled liberal democracy to survive the economic and political upheavals of the 20th century. It may be that laissez faire globalization must proceed to its ultimate conclusion before the crisis and collapse occurs that Marx described. Neoliberals have consigned Marxism, an ideology that claimed to point the way to the future, to the dustbin of history, but perhaps the neoliberal revival of laissez faire globalization is unwittingly steering us “back to the future” that Marx foresaw.

A catastrophic collapse of capitalism would not be in the interest of humanity, and Marxism from the barrel of a gun failed everywhere it was attempted, because revolutionary Marxism is a contradiction. First and foremost, Karl Marx was an evolutionary thinker, and it was just this sort of distortion of his ideas that he denounced when he said, “I am not a Marxist.” The creeping socialism in 20th century industrialized democracies was an evolutionary process more in keeping with Marx’s ideas than anything else that was tried. As the success of the neoliberal globalist agenda over the past 20 years has demonstrated, the process can be reversed, but the long-term risks to the many that are being run to promote the short-term gains of the few are extreme.

Prudence dictates a cooperative and conscientious exploration of a middle path. As President Lula da Silva said in Davos, “Constructing a new international economic order that is both fairer and more democratic is not only an act of generosity, but also, and principally, a demonstration of political astuteness.” (Lula da Silva 2003):

End Note

References

Banerjee, Sanjoy. 2002. Lecture notes by Thomas Gangale from IR 308, San Francisco State University, Fall 2002.

Gentile, Carmen. 2002. Why fear Lula? The Washington Times, 2 October. Internet. Available from http://www.washtimes.com/upi-breaking/20021002-102847-1955r.htm; accessed 22 March 2003.

Lula da Silva, Luis Inacio. 2003. Remarks from President Lula da Silva of Brazil. 26 January. Internet. Available from http://annualmeeting.weforum.org/site/homepublic.nsf/Content/Remarks+from+President+Lula+da+Silva+of+Brazil.html; accessed 22 March 2003.

Menges, Constantine C. 2002. Blocking a new axis of evil. The Washington Times, 7 August. Internet. Available from http://www.washtimes.com/commentary/20020807-85262452.htm; accessed 24 March 2003.

Murdock, Deroy. 2002. Brewing in Brazil. The Washington Times, 6 October. Internet. Available from http://www.washtimes.com/commentary/20021006-96764038.htm; accessed 22 March 2003.

O'Shaughnessy, Hugh. 2002. The boy for Brazil? The Observer, 6 October. Internet. Available from http://www.observer.co.uk/comment/story/0,6903,805488,00.html; accessed 24 March 2003.

Przeworski, Adam, Michael Alvarez, José Antonio Cheibub; and Fernando Limongi. 2000. Democracy and development: political institutions and well-being in the world, 1950-1990. Cambridge, UK.

Sparshott, Jeffrey. 2002. Lula da Silva vows to pursue free trade. The Washington Times, 11 December. Internet. Available from http://www.washtimes.com/business/20021211-69533736.htm; accessed 22 March 2003.

Steger, Manfred B. 2002. Globalism. Lanham, Maryland. Rowman & Littlefield Publishers, Inc.