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Selling Neoliberalism: Brazil's Instituto Liberal

  • William R. Nylen (a1)

In the 1980s more and more Latin American countries attempted to address daunting economic problems with variations on the so-called neoliberal theme. While one should have expected governments to implement some form of short-term fiscal and monetary adjustments to address the region's generalised fiscal crisis, it was less inevitable that this neoclassical formula should coincide with a more long-term structural adjustment formula, including such neoliberal (or neo-orthodox) policies as privatisation of State-owned companies, liberalization of tariffs, and reduction of the public sector workforce. As a result of this policy mix, the normal recessionary impact of adjustment intensified. The clamour for protection from that impact, and/or for putting an end to the policies themselves, has also intensified not only from the popular sector (that perennial target of all adjustments), but from the ranks of economic elites as well.

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1. Neoliberalism and neo-orthodoxy seem to be interchangeable terms. For a thorough account of their substantive content in terms of policy proposals, see Kahler, Miles in ‘Orthodoxy and its Alternatives: Explaining Approaches to Stabilization and Adjustment’, his contribution to Nelson, Joan M. (ed.), Economic Crisis and Policy Choice; The Politics of Adjustment in the Third World (Princeton, 1990), pp. 3361.

2. For this historical affinity, see Nelson (ed.), Economic Crisis…; see also Hirschman, Albert O., ‘The turn to authoritarianism in Latin America and the search for its economic determinants’, in Collier, David (ed.), The New Authoritarianism in Latin America (Princeton, 1979), pp. 6198.

3. Research on the Instituto Liberal (IL) and the Instituto Liberal de São Paulo (ILSP) was conducted between Sept. 1988 and April 1989.

In studying this ‘one instance’, I do not pretend to represent the entire universe of Brazilian neoliberalism in the 1980s (which would necessarily include, for example, organisations, cohorts, and informal networks of professional economists and high-level bureaucrats). I will go so far as to say, however, that my study is representative of the intellectual debates among neoliberals in Brazil at this time regarding the need to find a working compromise between neoliberal reforms and democratic politics.

4. Interview with the author (19 Sept. 1988).

5. While I focus on the Liberal Institutes of Rio de Janeiro and São Paulo in this article, I also researched and interviewed founding leaders of the Liberal Institute of Rio Grande do Sul. An essentially empirical treatment of the latter organisation, and its relationship to another liberal businessmen's organisation, the Institute of Business Studies, can be found in Gros, Denise B., ‘Empresários e Ação Política na Nova República: Notas Sobre o Instituto de Estudos Empresariais e o Instituto Liberal do Rio Grande do Sul’, prepared for delivery at the xv Encontro Anual da ANPOCS, 15–18 October 1991, Caxambú, Minas Gerais, Brazil; especially pp. 9–13.

6. For a ‘living history’ of Jacob, see Aquino, Cleber, ‘Jorge Wilson Simeira Jacob’, História Empresarial Vivida; Depoimentos de impresários Brasileiros Bern Sucedidos vol. I (São Paulo, 1986), pp. 109–50. According to Exame magazine's list of Brazil's ‘Biggest and Best’ (‘Melhores e Maiores’) companies in 1988, the parent company of the Grupo Fenicia, Arapuã, Lojas, was the fourth largest commercial retail chain. In an interview with the author (16 Feb. 1989), Jacob stated that he had 14,000 employees at that time in São Paulo alone.

7. From an interview (16 Feb. 1989) with the author.

8. Nemércio Nogueira (Director, ILSP), from an interview (18 Oct. 1988) with the author.

9. Jacob interview. For a history of the IEA by one of its founders, see Harris, Ralph, Not from benevolence: 20 years of economic dissent (London, 1977).

10. Actual dues at the time of this study were charged in OTNs (an inflation-indexed measurement): 250 OTNs for ‘maintainers’, 50 OTNs for ‘contributors’, and 5 OTNs for ‘collaborators’. US dollar conversions presented in this article, performed by the author, use the 13 Jan. 1989 OTN fiscal value ($Cz 6,843.28) and the $Cz/$US official exchange rate of the same day (1 $US = $Cz 843.13). Information from Dr. Manuel Augusto Teixeira (Administrative Director of ILSP) in an interview (6 Oct. 1988) with the author. For the ILSP's founding statutes, see Instituto Liberal de São Paulo, ‘Estatuto Social’ (mimeo, no date). Also see ‘Para liberais, direita e esquerda são conservadores, Folha de São Paulo, p. B–15.

11. Exame, edição especial: Melhores e Maiores (1987).

12. The Liberal Institutes were not affiliated with the two explicitly ‘liberal’ political parties operative in Brazil at this time: the Partido Frente Liberal (PFL), or the Partido Liberal (PL). For my own treatment of the PL, see William R. Nylen, ‘Liberalism Para Tudo Mundo Menos Eu; Brazil and the Neoliberal “Solution”’, conference paper no. 25, the Columbia University/New York University consortium (April 1990).

13. Oliveiros Ferreira (Director, ILSP), in an interview (10 Oct. 1988) with the author. For the concepts of ‘hegemony’, ‘hegemonic crisis’ and ‘hegemonic vacuum’ as expressed by their most well-known proponent, see Hoare, Quintin and Smith, Geoffrey N. (eds.), Antonio Gramsci; Selections from the Prison Notebooks (New York, 1971).

14. ‘Cartorial Capitalism’ is a term used in Brazil at this time to describe the web of sectoral alliances, both formal and informal, between segments of the State bureaucracy and/or public sector enterprises, on the one hand, and generally large private sector enterprises and their sectoral representative entities, on the other. The latter generally receive monopoly or oligopoly ‘rights’ or some other privileges from the State such as subsidised credit or guaranteed low prices on State-produced basic inputs like energy, steel, and transportation.

Cartorio is a word that harks back to Brazilian colonial history. The Portuguese crown granted monopolies, or cartorios, to individuals and groups to exploit certain resources or economic activities in return for a pledge of loyalty and a predetermined percentage of the revenues for the crown. Eventually, the word came to apply to the notaries whose official seals (carimbos) were essential in authenticating all legal documents and queries to the authorities. The system of cartorios was destined to rankle public opinion for at least two reasons: their ‘services’ were both time-consuming and potentially costly, and their lucrative positions were inherited, thus suggesting unearned official privilege.

For a full explanation, see my ‘Neoliberalism Para Tudo Mundo Menos Eu’, in Chalmers et al., The Right and Democracy pp. 259–76.

15. As IL Director, Nogueira told me, ‘The Left proposes Utopia. Liberalism only proposes reality. Utopia is much easier to sell to the impoverished and uneducated’.

One could argue that liberalism is just as Utopian as its nemesis on the Left. Both socialism and liberalism depend upon the creation of a ‘new man’ for their successful implementation. In the case of socialism, the public must become immune to the seductions of covetousness and capitalism's glorification of the selfish. In the case of liberalism, the public must become immune to the seductions of State beneficence in the form of exclusive subsidies, entitlements, protection, etc. In both cases, public officials must become paragons of public spiritedness and service.

16. Published and distributed by the IL network, but also appears alongside ‘Para liberais, direita e esquerda são conservadores’, Folha de São Paulo (4 Dec. 1988), p. B–15.

17. Oliveiros interview. Confirmed in Dr. Teixeira interview. Also confirmed in an interview (12 July 1988) with the directors of the IL-Porto Alegre in which one of the directors, Leonides Zelmanovitz, stated (and the rest agreed) that:

We have to do away with the whole concept of social justice. The concept, the language itself implies that the State must impose justice or equality onto society. The truth is that only increased productivity through liberal reforms can bring about social justice – which is to say, greater opportunity for social advancement through individual action and initiative.

Similar arguments can be found in Stewart's book cited above.

18. Nogueira interview.

19. The problem according to ILSP leaders is not the State, per se, so much as it is the way that the Brazilian State has been structured into the economy such that all economic decisions are subject to the vagaries and/or dictates of technocrats, politicians or other such brokers of power and influence.

20. Stewart interview. Later, Stewart made his point even more succinctly:

Poverty exists [in Brazil] not because someone has taken something material away, but because opportunities have been taken away. The problem is not ‘exploitation’, but monopolization.

21. On the IPES, see Dreifuss, René Armand, 1964: a conquista do estado, ação politico, poder e golpe de classe (Rio de Janeiro, 1981); also Flynn, Peter, Brazil; A Political Analysis (Boulder, CO, 1978), pp. 266–80.

22. Bailey, Norman A., ‘The Colombian, “Black Hand”: A Case Study of Neoliberalism in Latin America’, Review of Politics vol. 27, no. 4 (10. 1965), p. 445.

23. Several ILSP leaders, including Jacob, specifically mentioned the ‘shock’ program instituted by the Argentine Finance Minister, Martínez de Hoz (1976–80) as the worst possible type of neoliberal reform.

24. Nogueira interview.

25. For Lula, see ‘Partido dos Trabalhadores quer conquistar pequeno emptesariado’ Folha de São Paulo (8 May 1989), p. A–5 also ‘PT passa PDT e nega ruptura’ IstoÉ Senhor (23 Nov. 1988), pp. 37–9. For Covas, see ‘O tucano voa alto’, Veja (5 July 1989), pp. 32–4.

In an interview (13 Oct. 1988) with the author, economist and long-time PT intellectual, Paulo Singer, stated that the Brazilian Left had yet to discover a way of rebutting the neoliberal criticism of the Brazilian State's inefficiency and ineffectiveness as an agent of social programs. This echoes the point made in the essay by Harris, Richard L., ‘Marxism and the Transition to Socialism in Latin America’, Latin American Perspectives 56, vol. 15, no. 1 (Winter 1988), pp. 753.

* I thank Laurence Whitehead, Elizabeth Bortolaia Silva, Edward Gibson and the Journal's reviewer for helpful comments on earlier versions of this article.

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Journal of Latin American Studies
  • ISSN: 0022-216X
  • EISSN: 1469-767X
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