Neoliberal economic policies in Brazil (1994–2005): Cardoso, Lula and the need for a democratic alternative

Abstract

SAAD-FILHO This article offers a political economy interpretation of the continuation of neoliberalism in Brazil under the Workers' Party (PT) administration led by Luo ´s Inacio Lula da Silva from 2003 onwards. Neoliberal economic policies were closely associated with the government of Fernando Henrique Cardoso (1994- 2002) and they were widely perceived to have been rejected by voters in the 2002 elections. Many observers found it surprising that the new administration maintained its predecessor's economic programme. The government has also rejected calls from its core supporters to change course in order to deliver sustain- able growth and distributional and welfare improvements in Brazil. It would be unhelpful to approach these apparent paradoxes with schematic categories such as the 'ideological capture' or 'treason' of the PT leadership. While the latter is analytically uninteresting, the former describes reality accurately but fails to explain it. This article attempts to fill this gap through a review of the trajectory of neoliberalism in Brazil since 1994. It shows that, in spite of the difficulties involved in the search for alternatives to neoliberalism (due, in part, to the economic vulnerabilities imposed by neoliberalism itself), alternative policies were, and remain, feasible. However, their implementation requires confrontations with 'the market' and the imposition of costs on specific social groups, especially those that have gained most from the neoliberal re-regulation of the economy. The government's reluctance to pursue this change of course has had severely negative consequences for the majority of the population, especially the poorest social groups. These are precisely those that had expressed hopes that Lula's election would bring about social, political and economic changes in Brazil. The political exhaustion of neoliberalism in Brazil, and the rejection of neoliberal economic policies by the majority (including a significant part of the elite), were evident in the opinion polls long before the 2002 elections. Many commentators and political activists claimed that the neoliberal reforms were