changing the image" of the Brazilian dictatorship in the international press. Every day news comes out that is apparently "in contradiction" with the reactionary character of the Brazilian regime. General Geisel promises "new flexibility" and "the re-establishment of democratic norms"; statements are made in favor of a "national industry" based on Brazilian capital and the development of Brazilian technology. The government itself is taking up (even if only implicitly) one of the burning themes of its opposition, the notion that a more 12
Q. Finally, do you have a policy of alliances? A. We call on all workers, pobladores, peasants, soldiers, students, and civil servants, regardless of party affiliation, to join the organization of the resistance. We call for the rejection of any sort of alliance with the bourgeoisie or its parties. We call upon all the workers parties to form a front against the dictatorship. We call on the whole revolutionary left -- and in particular the MIR -- to strengthen a united pole able to take the first steps of resistance by the Chilean masses, under the banner of the socialist revolution. O equitable distribution of income is needed in order to step up consumption among the people. Even on the diplomatic field, Brazil is coming forward with an apparent "change" in its policy. It has significantly increased commercial relations with the workers states; it has recognized independent GuineaBissau ("to which we feel linked by bonds of blood and culture, " as the Brazilian delegate to the UN put it; it has renewed diplomatic relations with China (after signing some good trade agreements, of course). Very clear economic interests have led the regime to cease aligning itself with the bloc of the most reactionary countries. The government calls this policy "responsible pragmatism. " Even on the question of Cuba's readmittance to the Organization of American States, Brazil has taken an attitude of flexible resistance. Naturally, the reformists of all stripes, from the Stalinists to some unimportant sections of the bourgeoisie assembled in the MDB (Movimento Democrá-
ico Brasileiro -- Brazilian Democratic Movement), he only authorized opposition party, are hastening o overestimate these "openings" and "changes, exaggerating their significance and dynamic and attributing them to the pressure of a "powerful social force" -- the "progressive and anti-imperialist national bourgeoisie, " that half-mythical figure that is always present in reformist schemas. Within he revolutionary left, however, tendencies toward lind skepticism are being manifested. Because they correctly reject the myth of the "democratic national bourgeoisie" that the reformists are trying to pedle, these sectors refuse to analyze the meaning of the real changes that are now occurring in the Brazilian scene, changes that are a result of the economic and political problems that have built up during past years. Nhat is the Brazilian "economic miracle" all about? Nhat factors have led the military officers to change their foreign policy and take up hitherto forbidden themes like "national industry, " "Brazilian technolgy, " "a better distribution of income, " and so on? The dictatorship's character and function To correctly understand the problems confronting the Brazilian bourgeoisie today, it is necessary to fully grasp the meaning of the 1964 military coup and the transformations it produced in Brazilian society. The Brazilian Communist party has concocted an involved schema aimed at accounting for the debacle of its strategy of class collaboration in 1964. This theory claims that the military dictatorship was imposed by North American imperialism and a minority of the Brazilian nation, the latifundistas, against the great majority of the people. Included among this great majority is the national industrial bourgeoisie (since Brazilian society was allegedly feudal). This minority was terrified by the structural reforms the Goulart government claimed to be applying. In 1964-65 the Stalinists also added that the dictatorship was isolated and would soon fall. This interpretation had the drawback that it required its advocates to close their eyes to reality and refuse to see who had carried out the coup and why, and refuse to recognize the deep changes the officers were to make in Brazil in order to bring about capitalist development. But what was this autonomous national capitalism the reformists were dreaming about when they preached for the front of the working class and the industrial bourgeoisie in order to press for application of Goufart's basic reforms? It was a capitalism integrated into imperialism, which is the only form of capitalist development open to dependent countries. Ever since the 1950s the bourgeoisie has been seeking a way to give a new impetus to the process of industrialization. Since 1937 the bourgeoisie had been ruling in tight association with latifundistas linked to the export of agricultural products (especially coffee and sugar); it had drawn the capital for its investments from currency produced by foreign trade. Beginning in the 1950s (during the second Vargas government) this association started to lose its effectiveness, and a period of intense contradictions within the bourgeoisie opened up. It was an unstable period of recomposition of the economic and political system during which the industrial sector already held economic hegemony (even though it was narrowly dependent on the agri-export sector without yet holding political hegemony. It was a period during which the political hegemony of the old latifundista sector acted as a brake on the system's functioning in the service of industrial development. To change this situation, the bourgeoisie several times tried "progressive" and "autonomous" formulas having two basic axes: first, agrarian reform aimed at breaking the power of the latifundistas by redistributing the land and adapting agriculture to the exigencies of feeding the growing city population; and second, an "independent" foreign policy based on diplomatic contacts aimed at opening up new markets and breaking the narrow dependence on the United States. Toward this end, the bourgeoisie made use of the politico-organizational schema of the populism of Vargas and Goulart, seeking to base its "progressive" policy on mobilizations of the working class (which was locked into unions organically dependent on the Ministry of Labor) and, in certain periods, on peasant and student mobilizations. Progressive national bourgeoisie? That was the foundation on which the Stalinist reformists based their theory of the progressive role of the national bourgeoisie and elaborated a program subordinating the popular masses to the interests of the bourgeoisie. But the 1964 coup clearly exposed the illusory character of these theories. The "progressive" plan of bourgeois reforms had been accompanied by a severe policy of wage reduction, as is proved by the well-known three-year plan worked out by Celso Furtado, Goulart's minister, and presented in 1962. And this in the context of the acute inflation then prevailing. Thus, while the bourgeoisie based itself on working-class support, it could continue to do so only as long as Goulart's populism was able to contain the workers' mobilizations for better wages, thus preventing wage increases from causing a fall in the rate of profit, which was the key requirement during this phase of industrialization.
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BRAZIL But the force of the rise of the mass movement blew the reformist scheme to pieces. By 1963 it became clear that Goulart was incapable of controlling the workers movement: Agitation spread among the peasants and students; even sectors of the armed forces were affected. This created an atmosphere of agitation on a national scale, which made it easier for the bourgeoisie to grasp its own historic interests. Faced with pressure from the masses, the bourgeoisie understood that it was the working class rather than the latifundistas and North American imperialists that was doing the damage. It then opted for the military dictatorship and economic integration into imperialist capital, casting off its "progressive" and "nationalist" veneer. Contrary to what the Stalinists thought, the military government set up in 1964 was not the representative of the conservative, retrograde latifundista minority tied to the interests of North American imperialism and destined to hold up progress. In reality, the officers were representatives of the historic interests of the Brazilian industrial bourgeoisie. They took power to try to succeed where the bourgeois parties had failed in developing capitalism. They thus took up the defense of the strongest national bourgeois sectors, those most capable of offering advantages for foreign investors, the aim being to advance industrial capitalism. The first measures taken by the military dictatorship indicated that its goal was a process of structural change in the economic and political system in order to modernize it and adapt it to the needs of industrial development. If such development was not "progressive" as the reformists had hoped, it is because capitalist development on a world scale has long since been effected at the cost of deep distortions of the most backward economic sectors and of dependent countries like Brazil. From the firsi moment, the government sought to accelerate the process of monopolization of industrial sectors and their integration into imperialist capital. A series of fiscal arrangements were established to open the door to foreign investments. Naturally, these investments flowed toward big enterprises and this accelerated the crisis of the weakest industries, which began to shut down. This tendency was strengthened by a selective credit policy and by a campaign "against corruption, " the objective of which was to prosecute sectors that did not pay taxes. To be sure, the targets protested, and the CP was able to use such complaints as "proof" that the "national" bourgeoisie was against the military regime. What the CP and all the other sectors of the left that spread the myth of the "national bourgeoisie" failed to see was that only a part of the national bourgeoisie was involved -- the weakest part, generally composed of small enterprises producing nondurable consumer goods, the famous "traditional sector" that depends on consumption levels of the masses. This sector did not succeed in integrating itself into imperialism and it has always been crushed by the "Brazilian model. " Taking the decade 1960-1970 as a base, it can be seen that while the growth of "traditional" branches was very small (1.6% for the textile industry, 3.4% in the food industry), that of the "dynamic" branches was much higher (12.3% in the metal industry, 11% in the chemicals industry). Four years after the coup, the industrial sector had already been restructured on the whole and was adapted to the general level of monopolization. The protests then were squelched. But on its own, this measure would have been insufficient for creating conditions for development. The real problem that the Brazilian economy faced after 1962 was the fall in the rate of profit, which was caused mainly by the fact that the chronic inflation which had been accelerated in previous years had been accompanied by wage increases won because of the enormous pressure of the mass movement. Without resolving this problem it would have been impossible to obtain imperialist investments in sufficient quantity to stimulate the development of the country. The solution was the policy of "wage freeze, " that is, the illegalization of strikes and the creation of a system of annual increases according to category of labor, the rate of increase being set by the government (without any interference from the unions or the employers) on the basis of the rate of inflation during the previous year and the estimate of the rate of increase in productivity for the coming year. This system, completely manipulated by government technocrats, crushed the real wages of the working class. It is estimated that among the workers of greater São Paolo real wages fell nearly 70% between 1958 and 1973; for the workers of Rio de Janeiro, the fall was nearly 50% over the same period. It is quite clear that such a policy is possible only on the basis of severe repression of the mass movement and the vanguard. After the coup, the trade-union leaders of the PTB and the CP were persecuted, arrested, or exiled from the unions, and the corporatist-type unions, which until then had been an instrument for the policy of a populist government, passed into the service of the military dictatorship. It can be said that the main feature of the "Brazilian model, " the factor that serves as the mainspring of capitalist growth today, is the combination of compression of wages and severe repression of the masses. It is this resource that enabled the economy to get out of the phase of stagnation it had been caught in. Gross internal product, which had had a low growth rate from 1962 to 1967 (5.3% in 1962, 1.5% in 1963, 2.9% in 1964, 2.7% in 1965, 5.1% in 1966, and 4.8% in 1967) went through a rapid increase beginning in 1968, with
rates of 8.4% in 1968 and 9% in 1969. The policy of compression of wages, with its corollary of repression, torture, and death, became a fundamental element of the policy of the dictatorship without which it could not have been viable. This opened a period of economic, especially industrial, development that was carried out without the structural reforms that the populist and reformist Stalinists had believed indispensable for such industrial growth. Contrary to what the reformists had thought, this growth was not based on a better distribution of the national income, but on a greater concentration of it. (In 1960 the average salary of the petty bourgeoisie was approximately twice that of the workers; by 1969 it was four times as high.) The problem of the market for consumption of industrial products was resolved in a different manner under the "Brazilian model. " Growth of the internal market through increasing the purchasing power of the poorest layers (especially in the countryside) clashed with the need to increase the rate of profit by increasing exploitation of wage labor. The military government's solution to this problem can be summed up in three points. The first was a policy of easy credit for the petty bourgeoisie, so as to allow it to consume durable goods on a grand scale, exactly those goods produced by the industrial sectors that the government had encouraged the most, those that were considered "dynamic" and "profitable, " the places where foreign capital was concentrated. The second point was the transformation of the state into a large consumer. This was done through development plans for an infrastructure for transport, electrification, and equipping of the armed forces. The third point was export. This was the most difficult part of the program, because an underdeveloped country (no matter how "developed") has very little ability to compete on the world market in manufactured goods. The government resorted to several elements in its patient attempts to enlarge its share of the world market: an aggressive diplomatic policy; export of agricultural products and semi-industrial raw materials; attraction of foreign investment with the aim of producing manufactured products or parts for export; small-scale sale of nondurable consumer goods (like shoes). The years 1968 and 1969 were the "golden age" of the Brazilian economy. The economic upswing enabled the main bourgeois sectors to rally around the Costa e Silva government. In 1968 there was a revolutionary upturn: student agitation on a national scale, important and aggressive workers strikes at
Osasco (in São Paolo) and Contagem (in Minas Geiras), the first armed initiatives of the vanguard, and the rebellion of certain populist members of parliament. Bourgeois support enabled the government to respond with Institutional Act No.5, a real "coup within the coup. " The period opened by passage of this act in December 1968 was a period of political, organic, physical, and even moral destruction of the organizations of the left and of vanguard sectors of the mass movement. It was also a period of unprecedented economic expansion. The economic structures of the country changed profoundly; the vanguard was broken; the masses were exploited in a deepgoing an extensive fashion; the process of accumulation of capital was accelerated on a grand scale. First "breaches' in the 'model The "golden age" ended in the second half of 1973. The effects of the world crisis of capitalism (and especially the "oil crisis") erupted on the Brazilian scene, unsettling the plans of the dictatorship's technocrats. Inflation, control over which had been one of the axes of the government's economic plans, rose to a rate higher than the expected 12 percent. The inflation rate could not be concealed; it showed up in daily household experience. Delfin Neto, the minister of finance and "architect of the model, " whose prestige had risen very high during the previous four years, fell into a state of relative demoralization, dragging President Médici after him. There was a shortage of certain industrial raw materials like steel and concrete; the construction industry, a very important element in the economy, was paralyzed. The government became more demoralized. There was a shortage of basic foodstuffs in the cities; meat and coffee (!) had been exported in enormous quantities and the government had to import supplies to satisfy the internal market; beans, the traditional basic foodstuff among popular layers, were lacking, because they had been replaced by soya, which could be more profitably exported since the world market price was higher. This was the end of the "miracle" for some sectors of the urban middle class that had previously benefited from the economic expansion. The result was the first cracklings from sectors integrated into the consumer market; the first criticisms and demands were raised against the government. Naturally, what was involved was only the most superficial form of a more general problem that confronted the economic "model" beginning at the end of 1973. The greatest concern of the Brazilian ruling classes was to maintain the annual rate of increase in the gross internal product above 10 percent. (The record increase, 11.4 percent, had been set in 1973.) This growth rate, combined with the high profits that could be drawn from Brazil because of the low wages, had in the course of four years transformed the country into a paradise for foreign investors. In other words, without the high growth rate, Brazil would cease to be such an attractive field of
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BRAZIL investment. Moreover, it is clear that the continuity of economic growth depends mainly on foreign investment. While it is true that there has been a big accumulation of capital in the country, by both the bourgeoisie and the mixed state enterprises, this accumulation is still insufficient for "financing" continuing development. The big economic problem for the Brazilian bourgeoisie today is to maintain the growth of the gross internal product above 10 percent a year, and this requires a much greater volume of capital than that provided by the annual investments of the past several years. All the growth during the years of the "miracle" was based on utilization of the hidden capacity of the industrial structure set up during the 1950s (particularly in the automobile industry). Today this capacity has been exhausted. To continue the expansion at the same rate as in previous years would require capital to set up new units of production -- large units extremely profitable and compatible with the technological level attained by world capitalist production. The problem is precisely to offer foreign investors fields of capital investment that have a guaranteed market. There is no need to dwell on the fact that the exhaustion of the first phase of the Brazilian "model" ("deepening" of the market for durable consumer goods through offering credits to the petty bourgeoisie, works on a national infrastructure funded by the state, and export), combined with the worldwide crisis of capitalism, can only complicate things for the Brazilian bourgeoisie. We can see this clearly in the case of oil. Brazil imports 70 percent of the oil it uses. At the end of 1973 when the "oil crisis" broke out, the government began subsidizing oil in order to prevent the price increases from having repercussions on the sale of automobiles, which is a major area of production. In 1974 this policy was no longer possible. The government let the price of oil go up, and this had repercussions on the sale of automobiles. The consequence was simple: Brazil could no longer contemplate investing in the automobile industry. That resulted from a number of factors: (1) the exhaustion of the internal market for durable consumer goods, because the sectors that had been left out of the "miracle, " that is, the peasants, agricultural workers, urban proletariat, and the lowest layers of the petty bourgeoisie, generally get paid less than the vital minimum (in spite of a tendency of workers wages to increase during the past few months); (2) the world crisis, which led the imperialist powers to take protective measures, thus making the government's export plans more difficult; and (3) the problems that maintaining importation of such a quantity of oil created for the balance of payments (which for the first five months of 1974 ran at a deficit of $2 million). The bourgeoisie itself became aware that investment in many of the basic pillars 16 of industry -- automobiles for example -- had to be diverted toward other products and other markets. But at the end of 1973 the government was still in a euphoric mood and decided to promote unlimited expansion of "dynamic" industries. Examples are the plan to build a new Volkswagen factory at Taubate in São Paolo with a capacity of 3,000 units a day (the present factory produces 1,700 a day) and the million-dollar contracts signed between the provincial government of Minas Geiras and Fiat. But today the repercussions of the international crisis (and the consequent reduction in export plans) clearly require that the government reorient the economy anew. The question is, Reorient in what direction? All these economic problems, which broke to the surface at almost the same moment, inevitably had consequences for the political rule of the bourgeoisie. In 1964 the strongest and most important sectors of the Brazilian bourgeoisie were faced with the rise of the masses and chose the road of military dictatorship; in 1968, convinced of the effectiveness of the economic policy of the military, which was just be-
ginning to bear fruit, they permitted the promulgation of Institutional Act No.5; during the four following years they demonstrated an unlimited political docility, ceding all power to the dictatorship that was serving them. Today the bourgeoisie is beginning to relax its total support to the government. The relative demoralization of the Médici government and of public opinion gave rise to the first dissensions within the ruling classes. We are not referring here to the fictitious political struggle between the two parties that are allowed to play the game of the dictatorship, the official ARENA (Aliança Renovadora Nacional -- Alliance for National Renewal) and the opposition MDB (Movimento Democrático Brasileiro - - Brazilian Democratic Movement). Up to now the MDB has been just a puppet composed of a gang of professional politicians who succeeded in escaping the military witch-hunt; the group lacks any social base and represents the general ideas of the "old national bourgeoisie" that used to express itself through the PTB. It does not represent any important bourgeois sector. Beginning with the latest presidential elections, with the campaign of the "anticandidate" Ulisses Guimaráes, it can be said that the MDB became the channel of expression of the petty bourgeoisie's general aspirations toward greater liberty and of the rather formal demands of weak bourgeois sectors linked to "traditional" industrial branches that had been crushed by the "model" and deprived of the exercise of power. Thus, when we speak of political dissensions within the ruling classes, we mean conflicts among the high-ranking officers, within the bodies of the state administration, and even within the ARENA. These conflicts were expressed through muted struggles over ARENA's choice of candidates for president (Médici was seeking reelection), for minister of finance, and posts as governors (especially governor of São Paolo, a key post in the system). These struggles were not completely meaningless, for they had a rather interesting ideological content that illustrated the insipid political life of the country. The problem confronting the Brazilian ruling classes is an economic one: How can the economy be reoriented in the present situation? But it is political as well: Is it now necessary to maintain the same level of political centralization, or is it possible and desirable to move to greater decentralization in the decision-making bodies? It is quite clear that the military dictatorship, however technocratic and impersonal it might be, is not the ideal mechanism for the exercise of bourgeois power. For a certain time it was needed to confront a danger and overcome a crisis; later it was needed to set to work on a task of the dimensions of the economic expansion of the past several years, something that only a centralized leadership could do. But is it necessary now?
The ruling class is divided on this point. It is not a matter of structured currents or clearly delineated tendencies within the ruling bourgeois bloc. It is much more a general dilemma about the continuity of the "model. " Two sorts of responses have been given. One, presented by conservatives, proposes maintenance of a hard line (the same level of repression against the masses and the vanguard) and of the same political functioning of the parties (occasional debate in a rump parliament, prettified by bilateral and informal consultations between ministers and industrial interest groups). The other sort of response is concerned with making the necessary changes: a more selective repression striking the (clandestine) vanguard as before and "legally" halting sectors of the masses; a better distribution of the national income; elimination of the scandalous dimension of inequalities; and creation of certain institutional channels allowing ruling bourgeois sectors to make their opinions known in a direct and institutionalized fashion. Roughly it can be said that Médici and Delfin are conservatives and Geisel and Simonsen (the present minister of finance) are advocates of changes. But things are not that simple in reality. When Delfin was a superpowerful minister, he said that "the internal market can be developed only through expansion of the external market. " But he talked a different line when he was trying (unsuccessfully) to convince Geisel to name him as ARENA candidate for the post of governor of São Paolo province. At that time he said, "I therefore state that the revolution (he refers to the 1964 coup -- INPRECOR) has accomplished its work on the economic plane but not on the political and social plane, " a reference to the lack of popular representation and the high degree of concentration of income. In sum, we can say that the entire bourgeoisie is facing real problems for which it has not yet found adequate solutions. The skirmishes and the varying ideologies are expressions of these problems. It is quite obvious that at the time that these contradictions rose to the surface all social sectors, so long prevented from expressing their economic and democratic demands, took advantage of these breaches to make their discontent public, even if in a timid, spontaneous, and disorganized way. The total lack of political organization among all social sectors (even the bourgeoisie) and of trade-union traditions resulted in these first demonstrations being somewhat precarious, not yet serving to accumulate forces and attain a consistent level of functioning in the sense of breaking down the sentiment of self-censorship that dominated broad sectors of the population. Since there was no other vehicle, the MDB channeled this discontent. The campaign of the anticandidate was one such occasion; today, during the campaign for legislative elections in November,
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BRAZIL the MDB in many areas (particularly Rio Grande do Sul, but also Rio de Janeiro and São Paolo) is trying to attract new generations that see this party as the only place in which they can discuss the national political situation. The working class begins to raise its head The student movement, which had traditionally been a sounding board for the major events in the country, was not left unaffected by all these changes. In various provinces (São Paolo, Minas Geiras, Rio Grande do Sul) the students slowly began to raise their heads and seek out embryonic forms of organization. The student movement, which had an important tradition of struggle and clandestine organization, had been totally decapitated during the worst years of the repression (1970-71). Today, new generations have begun to emerge. They are slowly seeking to recreate room to develop their action. The demands that have most often mobilized the student milieu are those calling for democratic rights and opposing the repression. Nevertheless, a will to politicization has also been manifested (after the purge from the universities of all nonreactionary professors in 1969). This is shown in both the quantity and quality of the student organizations that have appeared. But the most interesting feature is the beginning, although very modest, of clandestine reorganization of workers sectors of the vanguard. During the years of the "miracle" and the intense exploitation of wage labor, there were relatively few spontaneous and explosive struggles for immediate demands; most of those that did take place were savagely repressed. In general, these struggles developed in superexploited sectors not fundamental to the economy: garbage collectors, taxi drivers, construction workers on the São Paolo subway, etc. But at the end of 1973 we began to see struggles of a very different sort, which expressed the first steps in the reorganization of the workers vanguard. These were "legal" strikes that sought to take advantage of the very special situatior. of the labor market at the time. The application of the wage freeze from 1964 on produced a decline in real wages of 50-70 percent compared to the previous period. At a certain point, overtime became generalized. For the workers, this meant a possibility of increasing their income enough to feed their families; for the employers, it was an advantage not to have to pay social benefits to new employees. The spread of overtime became so extensive that in greater São Paolo the normal work day in all industrial branches was ten to twelve hours. The increase in productivity and the expansion was based principally on this system of overtime. But industrial growth had been so rapid that during the previous three to four years a conjunctural phenom18 enon of relative labor shortage had developed. Although it was conjunctural, this phenomenon acquired a certain intensity, to the point that it raised the value of manual labor. The explanation for the relative labor shortage is that industrial expansion was more rapid than the exodus from the countryside to the cities (which is the usual way new labor is provided). In addition, the very bad working conditions -- unhealthy surroundings, long hours, bad food -- brought about a process of "selection" that eliminated many workers who came from the countryside but "could not adapt to conditions in the city." The sum of these elements created a situation that the workers intelligently utilized in the "legal" strikes, which were legal because they were simply refusals to work overtime; the actions were not considered to be "strikes" since the overtime hours were supposed to be voluntary. These strikes took place in the "dynamic" industrial branches, like Volkswagen, Mercedes Benz, General Motors, and Aco Villares (an elevator company). They were carried out so as to partially paralyze certain sectors in such a way as to disorganize and thereby lower daily production. The employers were eager to negotiate with the strikers and did not call out the police. Not all these strikes were victorious (in some cases, the unions intervened as "mediators" and managed to get the workers to go back to work and "discuss later"), but the big victory lay in the fact that the police did not intervene. In some factories the employers granted wage increases, even though this was "illegal" under the existing wagefreeze law. When Geisel took over as president, Simonsen, the new finance minister, declared that this law would remain in force and that any transgressions (increases that had been granted by employers) would be punished. Finally, in mid-1974 he declared that the law "was still in force, " but that certain increases granted as payment for "promotions" would be allowed. The process of industrialization had raised the value of labor beyond the expectations of the dictatorship, and that did not fail to stimulate a new rise of the working class. The main negative element that remains to be overcome is the immense sentiment of defeat, which has given rise to a generalized self-censorship of the masses, including the working class. Nor does the situation of the vanguard organizations facilitate overcoming that sentiment. We can say that the Brazilian vanguard was thrown completely off balance by this process. Today only a few nuclei remain of what was once the revolutionary left. Most of these nuclei have lost their vanguard character and are instead groups following after the masses (or "study groups" within the student movement). The Brazilian CP is using this situation to try to reassemble the remains of Castroism and reestablish
the CP's capitulationist policy. Due to its ties with the Soviet Union and the few roots that it has preserved within the working class, and, most important, because of the confused policy of the revolutionary left, the Communist party may be able to begin to become a pole of attraction again, in spite of its present weakness. The bourgeoisie tries to plug holes All the elements we have enumerated should not lead us to characterize the situation as one of economic crisis. The bourgeoisie stands at a crossroads; it has serious problems to resolve and has to transform the mechanisms that functioned so perfectly in the past. But it has no adequate solutions. It is obvious that the crisis of world capitalism and the structural problems typical of an "underdeveloped" economy -- which were only intensified by the "miracle" -can combine to make the problems facing the ruling class more difficult and can cause a crisis to ripen. Nevertheless, that has not yet happened and it would be an illusion to believe that it has. Four years of economic growth and increases in the strength of the ruling class cannot be simply written off. The exhaustion of this accumulated strength will require more time and more difficulties. The bourgeoisie is fighting to resolve these problems. The first months of the Geisel government were marked by audacious attempts in the realm of the international economy (which led to some changes in Brazilian foreign policy) through which the regime sought to establish various bilateral importexport accords (with Arab countries, Japan, West Germany). The aim was to get investments to finance its projects, often by associating them with state capital. In general the target sectors of investment were those enterprises making semifinished manufactured products, extracting agricultural and mining raw materials, and financing a process of semi-industrialization for the export market. This conformed to the government's general concern with improving the balance of payments, either by diminishing imports or by increasing exports. In this process, what the government has hitherto done on a relatively small scale -- setting up big capitalist enterprises in the countryside -- may be developed in an extensive fashion under the pretext of utilizing all the country's natural resources. This could lead to important changes in the social structure of the countryside, with a tendency to diminish the number of small peasants and incorporate the mass of peasants as wage labor into the large enterprises. The ruling class knows that the place it occupies in the world market depends and will for a long time continue to depend on export of its raw materials. The present world crisis, which has engendered both a protectionist policy by the advanced capitalist countries seeking to protect their manufactured products and a rise in the prices of raw materials, strengthens the "agricultural inclination" of the underdeveloped countries. But the government intends to transform the countryside into a profitable concern from the standpoint of the capitalist employers. In Brazil this means not so much modernizing the process of exploiting the land as "rationalizing, " that is, extending and deepening the exploitation of wage labor, even leading to systems having some characteristics similar to those of slavery. As for the changes in Brazil's general diplomatic stance, although they are significant, they simply show that, given the problems it is faced with, the ruling class has resolved to mediate its anti-Communist struggle in favor of its commercial needs. Behind the recognition of Guinea-Bissau and China stands an economic interest in trade with the African states and China. This also explains the government's still frigid attitude toward Cuba. The island is neither a market nor a supplier of raw materials or essential products for Brazil. On the contrary, in the sugar market it is a competitor. It was also the philosophy they call "responsible pragmatism" that led the Brazilian officers to abandon their previous totally pro-Israel position at the UN; they were seeking alliances and accords with the Arab states, and imported oil, most of which comes from the Middle East, has more weight than "principles" for the gorillas. In the same way, it is absurd to interpret the timid experiments at changes in internal policy as "democratic openings" and fruits of the "pressure of the national bourgeoisie" as the reformists and other sectors of the left do. All the timid changes, which are real, correspond to an attempt by the ruling class to change its tactics to deal with its new problems. The government's concern for "national industry" is an example. There is no strong and organized national bourgeoisie bringing pressure on the Geisel government to take measures in its favór. National capital is in general concentrated in commerce, construction, and production of some nondurable consumer goods (food, textiles, shoes); in the industrial sector it is concentrated in small and middle-sized industries. In 1969, the last year for which statistics are available, these small and middle-sized enterprises (those employing 1-100 workers and 101-500 workers, respectively) employed 63 percent of the work force and produced 56 percent of generated industrial value (production, minus salaries and raw materials). In the same year, these enterprises accounted for 98 percent of the total number of establishments. Since that date, more
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BRAZIL than 3,000 small and medium-sized enterprises have closed down and a significant number of middle-sized enterprises owned by national capital have been taken over by foreign capital. A real picture of the structure of production in the country can be obtained by looking at the ten leading enterprises in each industrial sector. In the sector of production of means of production seven are foreignowned and three are owned by national capital; in the durable consumer goods sector all ten are foreign; in the nondurable consumer goods sector six are foreign, three are national, and one is a state company; in the semimanufactured sector, five are foreign, one is national, and four are state-owned. Thus, there is no national bourgeoisie as a strong class bringing pressure on the government. The government's current concern with "national industry" has a different origin. It is aimed at limiting the present weight of imports of machinery and technology in the balance of payments. Geisel indicated this quite clearly in a speech delivered in March 1974. After having observed the "stagnation" of national private enterprise, he said that it was "urgent to try to strengthen this sector of industry so that it can assume its appropriate role, which includes supporting and stimulating other sectors (foreign and state) with which it is virtually directly confronted today. " The concern about national industry does not imply any change in attitude toward foreign investment, which continues to be vital for the economy of the country. That is why Geisel declared in another part of the same speech: "It is desirable to maintain the same policy of egalitarian treatment and even favoritism toward foreign capital in the nonstrategic sectors. " The concrete measures the government has adopted in favor of "national industry" do not amount to a grain's worth of the enormous advantages foreign capital commands. They only fit into the earlier policy and are aimed above all at reducing the present dependence on imported machinery, technology, and equipment. The government proposes to extend financial support to those industries of national capital that "present satisfactory economic-financial indices. " This will be done through the Investibras, a recently created body. Through the Embramec (Mecánica Brasilena -- Brazilian Mechanics), another recently created body, it will finance expansion plans of national industries producing machinery and equipment. A detailed analysis of these timid measures has led economists to declare that they are incapable of counteracting one of the "natural" tendencies of the "model": Dependence on foreign capital conditions new investments in terms of import of machinery, equipment, and technology. Nevertheless, whether these measures are viable or not, what must be stressed is that the objective of the Brazilian bourgeoisie (of its strongest sectors, those most clearly integrated 20 into imperialist capital) is to diminish the tight dependence on the oscillations of the world market. This is necessary in view of the significant weight of imports (whether machinery, equipment and technology, or raw materials like oil, wheat and grain) and the disequilibrium of the balance of payments, correction of which is a key element in maintaining the current rate of growth. In taking such measures the government is responding much more to the pressures and difficulties of the world crisis than to the pressure of national bourgeois sectors of the small and middle-sized enterprises. This response is oriented above all toward the interests of the strong sectors of the Brazilian bourgeoisie. Those are the interests the military officers have been representing ever since they came to power. O September 1974 Correction Because of an error in typography, a sentence in an article published in INPRECOR No. 10 (October 17) was incomprehensible. In the article "An Arab and Iranian Finance Capital Emerges, "by Ernest Mandel, page 12, paragraph 6, sentence 5 should read: "It has also acquired control of two maritime companies, one linking Cyprus and Britain, the other linking England and Ireland. In the Arab countries themselves Arab finance capital, associated with big imperialist monopolies (with the Arabs often holding financial and political control), is engaged in a whole series of major industrial projects. "
one year after the "carthauake"
ISRAEL BY MICHEL WARSHAWSKY_ The effects of the October War throughout the Arab region -- substantial strengthening of local reactionary forces and accelerated penetration by American imperialism into countries in which it had been restricted by the rise of the Nasserist movement -have tended to push to the background the deep crisis that continues to rack the number one bastion of imperialism in the region: the state of Israel. The Israeli press uses the term "earthquake" to describe the impact of the crisis of Zionist society provoked by the October War. But unlike an