The Path to Crisis

Not too long ago the world’s moderate left could hold Brazil up as a prime example of success. Global economic prosperity and President Lula’s exceptional talent allowed his administration to temper the neoliberal policy framework of the 1990s. He introduced more expansionary policies and unleashed a virtuous cycle of growth that increased profits, created jobs, distributed income to the margins, increased democratic participation, and built a stable political culture. When Lula stepped down in January 2011, his popularity rating approached 90 percent.

Even then, however, his party was riven by contradictions. The PT’s remarkable ability to bring together bourgeois and working-class interests, delivering growth with redistribution, made it the best-funded political machine in Brazil. Access to money played an essential role in its success given the cost of winning elections in a large country with a fractured political system. But this cash infusion transformed the purported voice of the working class into the internal bourgeoisie’s political arm. Its most influential members became agents for powerful interests.

Even though no one suggested personal gain as a motive, the PT found itself enmeshed in a cloud of financial impropriety. The party became forever vulnerable to accusations of hypocrisy, supported by damaging disclosures from disgruntled funders and hostile media outlets. Its method for gaining electoral traction exposed it to seemingly endless charges of corruption.

As the PT moved to the center, it also lost its political coherence. The party defended both economic stability and structural reform, supported big capital while claiming to represent workers, and promoted a new, inclusive political culture while pursuing alliances with the most unsavory figures in Brazilian politics. Beyond its failure to choose a platform that it could actually defend, the PT neglected its most committed working-class supporters, refused to challenge the interests of the one percent, and shied away from reforming the media, even though mainstream news outlets systematically undermined the party’s administrations and repeatedly sought to destroy its leaders.

A worsening economic slowdown, followed by political crisis, has engulfed Brazil since 2011. This economic degradation and the Rousseff administration’s repeated political mistakes encouraged a convergence of revolts that would eventually include the media, finance, industrial capital, the upper middle class, most of the government’s base in Congress, and virtually the entire judiciary.

While these hostile forces gathered steam, the PT’s social base stayed largely inert: most workers remained passive in the face of a strong right-wing opposition, a shrill media, and the economic downturn. The PT, which years ago chose to follow the rules of conventional politics, found itself defenseless against an extraordinarily aggressive constellation of enemies.

A diet of scandal and hatred for the PT, served by the mainstream media, has nurtured Brazil’s upper middle classes. Dizzy with indignation, this group has tended to ignore the economic, social, and political impacts of neoliberalism. Instead, they blame Lula and Rousseff for intangible but presumably vast damages to the state as a result of corruption and inefficiency. Implicitly, they hold the PT accountable for their own loss of income, privilege, and authority.

A string of corruption scandals energized them. The Lava Jato (“carwash”) investigation, which the federal police launched in 2014, gained traction gradually, eventually becoming a juggernaut that overwhelmed the Rousseff administration. Accusations of corruption tainted the entire political system, and the PT appeared as a prime example. The media loudly and daily proclaimed that Lula’s party had set up a slick system to rob public assets and defraud the republic.

The wheels of justice have turned surprisingly briskly. Law enforcement has developed a procedure for handling the investigation: arrest carefully chosen businessmen and prominent politicians and keep them in jail until they enter a plea bargain that incriminates others. Repeat as needed. Evidence has become entirely optional: hearsay is good enough.

The investigation inevitably caught other parties in the net, but this didn’t matter: only claims against the PT really counted. No credible allegations were made against Rousseff, but the absence of guilt did not slow her political liquidation. The opposition concocted extraneous accusations, and an overwhelming majority in the chamber of deputies and the senate impeached her in August 2016.

A Fractured Ruling Class

A conspiracy of thieves, hoping to restore neoliberalism and protect themselves against investigation, led the impeachment drive. An increasingly right-wing upper middle class supported it, calling for the end of corruption — code for the destruction of the PT. Despite promises that removing the president would unleash a brisk recovery, Brazil remains mired in the most severe crisis in its recorded history.

The economy is now a picture of desolation. The slowdown culminated in sharp contractions in 2015 and 2016, reducing income per capita to the level of the early 2000s. The gains achieved under the PT administrations evaporated. Open unemployment has shot up. The fiscal deficit and public debt are mounting, and several domestic conglomerates — especially the so-called national champions, which the PT sponsored in its alliance with the internal bourgeoisie — are experiencing deep crisis.

The political front has offered the putschists only disappointment. Most party leaders have been implicated in the never-ending array of scandals propelled by the media and rogue judiciary. Congress has become utterly demoralized, and the executive is disorganized. Policy-making has become erratic.

A coalition of international capital and the domestic bourgeoisie associated with it supports the Temer administration, hoping to use it to restore their political hegemony and neoliberalism’s economic primacy. The government has complied with gusto.

Immediately after Rousseff’s impeachment, Temer pushed for a sharp fiscal adjustment, reversed Brazil’s independent foreign policy, “reformed” the state-owned conglomerate Petrobras by offering significant concessions to the oil majors, removed local-content rules for government procurement, and reined in the Brazilian development bank’s (BNDES) aspirations. The government also denationalized Brazil’s vast oil reserves in the South Atlantic, as well as the energy, agriculture, and infrastructure sectors.

Despite these neoliberal successes, Temer hasn’t delivered on his promise to reform pensions and labor law. This failure has frustrated his political sponsors, showing that his government cannot create a secure environment for neoliberal hegemony, which requires a stable and effective administration.

Several things help explain Temer’s shortcomings. Most simply, he was not elected to office and has no personal legitimacy. Indeed, his administration has implemented the same program the right-wing opposition offered in 2014, when it was defeated at the polls.

Trade unions and the country’s mass organizations have challenged his government’s policies at every turn. Their resistance has been growing, and the largest general strike in Brazil’s history took place on April 28, with promises of more to come.

Further, a minority of the bourgeoisie has always opposed the government’s push to restore neoliberalism; for example, large oil and gas firms are suing the government because of the changes to the local-content rules, and domestic conglomerates have objected to cuts in BNDES-subsidized credit.

All this is very important. But the most significant source of political instability comes from the judicial attack on prominent political leaders within the Temer government. Even though the PT has always been the main target of the corruption investigations, key figures in the judiciary have developed a genuine desire to purify the political system. This surprising onslaught has disabled the administration.

Brazilian anticorruption legislation follows American law, and the US Justice Department trained many of the judiciary’s leading figures. They, however, are not acting merely as tools of American imperialism: as the investigations have unfolded, these authorities have built their own base of support in the upper middle class. Now, this group identifies with the judicial branch, demonstrating their support on social media and in the streets, further validating the endless investigations.

An alliance with the mainstream media has further expanded the judiciary’s power. Daily leaks, media-led worship of telegenic judges and prosecutors, and live coverage of raids strengthens this relationship. The investigations have fed ratings and newspaper sales, while media attention has empowered judges, lawyers, and the police to perform increasingly outrageous deeds, often for publicity and in blatant disregard of the law. This symbiosis between the media and the judiciary has fueled upper-middle-class outrage against the political system. What started with the PT now transcends Lula’s party.

As a result, the coup’s plotters have lost control of the corruption investigations, and their own political base in the upper middle class has abandoned them. These two elements — the escape of the judiciary and the desertion of the upper middle class — have created the instability that plagues the Temer administration.

The alliance built to defeat Rousseff and the PT has fractured, compromising the government’s ability to restore neoliberalism’s hegemony. For example, capital demands the immediate reform of pensions and labor laws, but Henrique Meirelles, minister of finance, cannot accomplish that thanks to political turmoil and a deadlocked congress. A judiciary empowered by the bourgeoisie now threatens that class’s strategic program.

This conflict pits two reactionary wings of the political right against each other. Neither upholds a progressive platform or the interests of workers and the poor majority. This dispute might damage both factions, opening a gap for the Left, which now demands the president’s resignation and direct elections. This is a fight the Left can win.