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Brazil and the World Financial Crisis

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Classic way-out

One of the classic solutions that capitalism finds for its crises is the destruction of part of capital itself. Indeed, this destruction is a necessary part of the resolution of the crisis. This, of course, creates contradictions among the capitalists. Some lose everything – or nearly everything – and others make gains. During just the first weeks of the global crisis, some four trillion dollars were wiped out. Some capitalists had to bear this loss. For instance, Sadia lost R$1.8bn (US$760m). But at the same time someone else is gaining, expanding their control in the sector. And now the process will begin of recovering these losses by transferring them to the contract farmers who supply the company and to the workers in their factories. All part of the process of restoring profits. In the process of transition from a crisis to a new stage of accumulation, there is always an increase in exploitation.

This increase in exploitation also occurs between rich and poor countries, with more capital being transferred from the periphery to the centre. This is readily seen in the case of transnational companies. The US company, General Motors, is almost bankrupt. One of the reasons why it hasn’t closed down is that, in just the last two months, the Brazilian subsidiary of General Motors transferred to it US$500 million. And governments also contribute to this transfer of capital from the South to the North. The Brazilian government says it is protected from the crisis because it has US$200 billion in foreign reserves. But all this money is deposited in New York banks. If the crisis deepens, there is no way in which the Brazilian government will get this money back. The printing of dollars is another way for increasing exploitation. It is a key mechanism for maintaining the standard of living of the American middle class at the cost of the increased exploitation of the rest of the world.

Surplus value

Using Marxist terminology, we can say that it is the state that collects and controls surplus value, which it mainly obtains through taxes, and then transfers part of this to capital. In 1929 the state carried out this role but under the influence of Keynesian ideas. Both in Great Britain and in the USA, the capitalist state used this surplus value to fund massive employment and public investment programmes. Now, even though they are resuscitating Keynes to justify their actions, what the states are doing is simply handing over the surplus value to banks and companies. The class character of the state was never clearer. And we on the left must explain to the mass of the people what is going on.

All that we have seen from governments in the central economies and their subordinates in the periphery are palliative measures. They are reacting to events, trying to stem the losses. We can’t find anywhere not even a faint shadow of Roosevelt’s New Deal. No government has come up with a clear proposal for getting out of the crisis. Even the electoral illusions created around Osama lasted a mere week. He only had to assemble his team for everyone to realise that what we are faced with are four years of a Clinton government. Obama hasn’t the courage or the capacity to adopt Keynesian policies. What is becoming clear is that, in practice, even the governments in the central countries don’t have political control over the process. They are not the hegemonic power.

So how are the so-called progressive governments in South America reacting to the crisis? There has been nothing very new in their response. Chávez called an extraordinary meeting of Alba (the Bolivaian Alternative for the Americas) and they prepared an emergency proposal which they took to the meeting in Salvador. In my opinion, the proposal was good but it was a proposal for resistance, not a programme of action. It can be summed up in three points: withdrawal from the dollar sphere, creating a currency of the Americas; the establishment of the Bank of the South, which, in practice, would replace the IMF; and the creation of a common economic zone, which would allow countries greater independence from the central economies.

Class struggle in Brazil

Crises are moments that necessarily lead to the repositioning of classes. They reshuffle the cards and bring new opportunities for class struggle. This crisis makes it possible for us to extricate ourselves from our present quandary in which we face the decline of mass struggle and the total hegemony of the dominant classes. The Brazilian bourgeoisie is totally dependent on international capital and doesn’t have a national project. This is an advantage for us. In the 1929 crisis the Brazilian bourgeoisie presented its own proposal for national development and used it to promote its model of industrialisation, which was its own model even though it was dependent on the central economies. Today the Brazilian bourgeoisie’s only response is to help cover the losses and to become even more subordinate to international capital. The capitalists can’t formulate a national proposal. They can’t present a unified proposal. You only have to read the newspapers. Each capitalist comes up with an idea that is even more bizarre than the last. This is good for us, because we don’t have to compete with the bourgeoisie.

So the crisis is going to create new scenarios. And now comes the age-old question: how to take advantage of capital’s contradictions? In other words, prospects are good, things will change and, when this happens, we have to act. We have to take advantage of the fissures to encourage social struggles of all kind. It is social struggle that leads to class struggle. There will be space to restart the debate about an alternative project for the country. I think we will have an opportunity to discuss the need for a mass-based project with nationalist components. I’m not talking about the bourgeoisie’s old project for national development, but a new one that is nationalist from the point of view of recovering the Brazilian people’s sovereignty over its wealth: oil, electric energy, land, food, and so on.

The industrial proletariat, the most organised part of the working class from an economic and trade union point of view, is anaesthetised. Why? For three reasons: a trade union structure that acts like a straight jacket, hindering the emergence of new leaders; the fact that the trade union base in the factories is young and inexperienced in social struggle; and because there is the Lula myth which has created the idea that ‘one of us is up there’. This transfers to him the need to do something about the crisis.

A prolonged crisis is good for us. Changes can occur in the collective behaviour of the industrial proletariat. The working class linked to production reacts very quickly in moments of crisis. So we must focus our energy on this sector. Forget the trade unions and look at the class. We need urgently to take this information and this debate to all the possible social spaces and to explain how everyone will be affected by the crisis. More than ever before we need to recover our old methods of agitation and propaganda. Quickly, before we are faced with mass unemployment and the loss of rights.

Sadia, the largest poultry producer in Brazil and one of the world’s leading producers of chilled and frozen meat, is facing serious financial problems, partly because it incurred heavy losses from wrong-way currency bets. In December it was reported in the press that the company was in talks to raise about US$360 million through the sale of a 20 percent stake in the company’s equity.

Summit of Latin American and Caribbean Integration and Development, which was held in Salvador, Brazil, on 16 and December 17, 2008.

by Sue Branford