Time For Change To Leave The Crisis Behind

The latest article in our collaboration with Le Monde Diplomatique Brasil.

There are hundreds of thousands of people like us in Brasil who are worried about the evolution of the economy and politics and are profoundly disappointed with the performance of the government, the PT and the left in general.

The neoliberal adjustments are deepening, mowing down jobs, weakening industry, disabling the State’s capacity as a motor of development and cutting social policies and rights that used to be considered firmly guaranteed in the constitution, such as resources for education and health. The low level of resistance by the workers and the political forces that represent them is incredible faced with the veritable looting that rentierism exerts over the wealth produced in Brasil and social rights.

There is no discussion about utopia and the future.  There is no development project to defend. The left has shut up. Politics, as a dispute between those who are in need for a greater parcel of the produced wealth, has ceased to exist because of the silence of the people who are being dispossessed. And the budget cuts spiral downwards in new waves of eroding rights. The consequences are not sacrifices needed to put the economy in order, as most economists say. They are a deliberate policy to lower labor costs and impoverish the majority of the population.

We have to go to the streets to change the game,  to show that the majority disagrees with these austerity policies and to trigger a rebirth in politics as a space for disputing alternative development models.

There are ways out of the crisis, as an important group of over 300 progressive intellectuals, professors and social movement leaders  showed on September 28  when they released a policy paper of guidelines. LeMonde Diplomatique participated in and supports this initiative. You can see the entire document at

We need to disarm this retrogressive trap and change the criteria for monitoring the economy, which are currently based on neoliberal orthodoxy that ignores social issues.

The short term proposals for overcoming the crisis laid out in the paper can be summarized as follows:

1. Preserve jobs and income

Adopt a pro-growth agenda for preserving workers jobs and incomes. This is crucial to retard social retrogression and to consolidate the internal mass consumer market, sustain economic growth and reinvigorate the tax base.

2. Lower Interest Rates

Brasil’s interest rate policy has no justification. Rate increases are not slowing inflation. They do, however, enrich national and international speculative capital and gridlock the entire economy. Lowering the interest rates will stimulate productive activities, job generation and workers incomes.

3. Rebuild the State’s Financial Capacity

There is a lot to be done in order to rebuild the State’s financial capacity: revise the policy of funding for the business sector (R$263 Billion in 2014); fight tax evasion (R$1.12 Trillion in 2011); increase the weight of direct taxation and reduce indirect taxation; make direct taxation more progressive; tax profits, dividends and profits sent overseas; increase taxes on large rural properties; create inheritance taxes and taxes on large fortunes, etc.

4. Free Up Public and Private investments

Stimulate rapid advances in social, urban and logistical infrastructure investments because this should be the great key to resuming growth during the next few years, since consumption will be limited due to the fall in income that is occurring at the moment. The rapid resolution of crises in the energy, petroleum and natural gas sectors is also fundamental to reinvigorate investments.

5. Strengthen the Internal Markets

A return to economic and industrial growth enables the expansion of opportunities for qualified labor, the continuity of wage increases, increases in social spending and increased family incomes. The expansion of the internal market is fundamental for driving growth.

6. Preserve Social Spending Levels

Social spending, due to its multiplier effects, drives growth and reduces income inequality. It should therefore be considered as investment and not cost. Social investment and public services are not only indispensable to guarantee rights, but are a necessary part of a strategy to resume growth.

These are a merely a few key points of a policy paper that shows a path to leave the crisis behind. It also shows that the banks and the financial sector are the only ones that gain anything in the current situation. For the good of Brasil, it’s time to change the game,   leave the crisis behind and  reunite a broad coalition of civil society organisations to push for these macroeconomic changes.

By Silvio Caccia Bava

Silvio Caccia Bava, political scientist and Editor-in-Chief of Le Monde Diplomatique Brasil.