From Materialist to Idealist Compensation: The Competing Paths for Implementing Neoliberalism in Brazil

Between 1930 and 1985, Brazil built a political economy regime based on developmentalist goals, achieving contradictory outcomes. For one side, the country was able to internalize complex manufacturing industries, upgrading its exports’ composition. On the other hand, the industrial progress deepened economic, social and regional inequalities, being sustained by authoritarian political regimes. After democratic transition, the new constitution was designed around social-democratic goals, seeking improvements in political participation and social protection, but faced a challenging international context, moving towards neoliberal order, organized around Washington Consensus goals. Considering these initial choices and international factors, this paper intends to build a longitudinal analysis bases on process-tracing techniques about how Brazilian democratic governments after democratization pursued the goals of neoliberalism, trying to simultaneously preserve social cohesion and political legitimacy. Based on Bohle and Greskovits’ (2012) Polanyian framework, we propose to compare governments’ agenda around three core institutional areas: economic liberalization and macroeconomic management; protection of affected social groups and economic sectors; political institutions. Following this approach, we argue that Brazilian governments oscillated between pure neoliberal, embedded neoliberal and neocorporatist strategies, being each model associated with different kinds of crises. In this regard, pure and technocratic neoliberalism under Collor presidency (1990-1992) tried to accelerate economic liberalization and tame inflation, but harmed different social groups, failing to keep political stability. Embedded neoliberalism under Cardoso (1995-2002) and first Lula (2003-2006) presidencies could combine neoliberal goals with political stability due the compensation of vulnerable social groups and loser economic sectors, but failed to achieve sustainable economic growth. Neocorporatism under second Lula (2007-2010) and first Rousseff (2011-2014) presidencies was able to obtain higher levels economic growth, social inclusion and political participation, but could not avoid political instability after the reversal of commodity boom. Finally, we argue that Bolsonaro presidency (2018-) offers two complementary solutions for the actors that intend to implement pure neoliberalism in Brazil: first, the restriction of political participation of social movements and loser economic actors in order to tame the conflict between post-democratization demands for social protection and international and domestic pressure for deeper economic liberalization; second, the presentation of a new compensation strategy, switching from materialist compensation through industrial subsides and social welfare to idealist compensation through the building of a new kind of nationalist discourse, mobilized around culture wars’ issues.