industry and private investment, and the large
bank loans required, were attracted by the avail-
ability of cheap and plentiful local labour, which
showed itself eminently capable of being trained;
no less attractive were the repression of labour
and the comparative freedom from strikes, as well
as the political stability which the generals’ police
state seemed to guarantee. Thus the unhappy link
was established between capitalism, foreign pen-
etration and repression which so powerfully fuels
anti-Western, particularly anti-North American,
sentiment among the masses.
The Brazilian economy achieved rapid growth
but it also had to weather periods of austerity and
retrenchment when forced development pro-
duced high inflation and severe balance-of-
payments crises. After the Vargas period, the
next phase of spectacular growth was kickstarted
by the ambitious economic plan masterminded
by President Juscelino Kubitschek in the 1950s.
It was he who decided to construct the brand new
capital of Brasilia as an expression of the country’s
unity, confidence and ultra-modernity, but his
boom, based on attracting foreign investment,
had to be followed by another period of auster-
ity. Under the generals a new boom began in
- It was checked but not stopped by the
tripling of oil prices in 1973–4. Foreign bankers,
flush with Middle Eastern oil money, poured it
into Brazil which, accordingly, accumulated the
largest foreign debt in the world.
Brazil had already become predominantly
urban before the 1950s, but the urban workers
did not share in their country’s wealth. Their real
wages, which had been rising in the 1950s, fell
again after 1960; many workers received no more
than the minimum wage, which during these two
decades almost halved. This, in turn, provided the
profits for an industrial and technical elite and
allowed Brazil to enjoy spectacular growth rates.
By 1981 the cycle of growth had come to a full
stop. The economy in the 1980s was overshad-
owed by the need to service the foreign debts
and, despite a successful industrial sector, the
Brazilian government could not devote to social
and welfare programmes the resources so desper-
ately needed by the poor. The crippling con-
straints this imposed on the Brazilian economy
created that vicious circle of social deprivation and
political instability characteristic of so much of the
South American continent.
As elsewhere in Latin America, the civilian
administration of President José Sarney in 1986
introduced a harsh austerity programme; inflation
was halted for a time, but the plan collapsed and
inflation was back at 800 per cent in 1987. Apart
from the state of the economy, the burning ques-
tion was whether Brazil would become some sort
of democracy by virtue of the new constitution.
When this was promulgated in October 1988,
the president was allowed wide-ranging powers
and the armed forces were given the ambigu-
ous responsibility of maintaining ‘constitutional
order’. In other respects the repressive rule of the
previous military dictators was repudiated. The
new constitution guaranteed basic civil rights,
including the right of workers to strike as well as
freedom of speech and the freedom of the press.
Another restructuring plan for the economy to
beat rampant inflation was launched in January
- President Sarney’s obvious failures led to
his defeat in the presidential elections that
November. A more positive aspect of his admin-
istration was that it took the first steps towards
protecting the Amazon rainforests, whose de-
spoliation had aroused international concern.
In March 1990 the new president, Fernando
Collor de Mello, was inaugurated. Mello pro-
mised to transform Brazil’s economic chaos. A
stylish 40-year-old, he vowed to help the under-
dogs, the ‘shirtless ones’, and to end the misman-
agement and corruption of the years of the
generals and President Sarney.
Mello began his presidency with the most
radical austerity measures of any Latin American
reformer by freezing 80 per cent of all but the
smallest financial assets for eighteen months. He
slimmed down the large bureaucracy and vowed
to move towards a free-market economy, dis-
mantling Brazil’s high tariffs and exposing the
featherbedded state industries. The result in his
first few months was unemployment and reces-
sion. By the summer of 1990 he had to ease up
on some of his draconian measures and inflation
began to rise once more. The economic future
also depended on a favourable settlement with
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THE WORLD OF LATIN AMERICA 701
