Fernando Henrique Cardoso: Reinventing Democracy in Brazil 9781685851880

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Fernando Henrique Cardoso

Fernando Henrique Cardoso Reinventing Democracy in Brazil

Ted G. Goertzel

LYN NE RIENNER PUBLISHERS

B O U L D E R L O N D O N

Published in the United States of America in 1999 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU © 1999 by Lynne Rienner Publishers, Inc. All rights reserved

Library of Congress Cataloging-in-Publication Data Goertzel, Ted George. Fernando Henrique Cardoso : reinventing democracy in Brazil / by Ted G. Goertzel. p. cm. Includes bibliographical references and index. ISBN 1-55587-830-X (he. : alk. paper). ISBN 1-55587-831-8 (pbk. : alk. paper) 1. Cardoso, Fernando Henrique. 2. Brazil—Politics and government—1964-1985. 3. Brazil—Politics and government—1985I. Title. F2538.5.C37G64 1999 981.06'3—dc21 98-46653 CIP British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library.

Printed and bound in the United States of America

@

The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1984. 5 4 3 2 1

For Linda, who makes it all worthwhile

Contents

Preface

ix

1 B o r n o n a Catapult to Power, 1931-1964

1

2 Exile, 1964-1968

35

3 From Professor to Senator, 1969-1982

51

4 Senator of the Republic, 1983-1992

81

5 Taming Inflation and W i n n i n g the Presidency, 1992-1994

101

6 T h e Intellectual in Power, 1994-1998

125

7 Cardoso as an Applied Social Scientist

177

Epilogue

191

Selected Bibliography Index About the Book

201 215 220

vii

Preface

I FIRST READ FERNANDO HENRIQUE CARDOSO'S WORK IN THE 1960S WHEN I was d o i n g graduate work in sociology at Washington University in St. Louis. I t h e n spent two years in Brazil, f r o m 1966 to 1968, including o n e year as a visiting instructor at the University of Sao Paulo, a n d my doctoral dissertation was o n the Brazilian s t u d e n t m o v e m e n t of the era. Cardoso was in exile at the time, so I did n o t m e e t him, b u t I did know several of his close friends. After r e t u r n i n g to the U n i t e d States in 1968,1 p u t aside my interest in Brazil to work o n o t h e r topics, including a biography of Nobel Prize-winning chemist Linus Pauling, two books of comparative biography, a n d studies of welfare r e f o r m a n d o t h e r policy issues. My political beliefs evolved in m u c h the same way as Cardoso's, in response to world trends. W h e n C a r d o s o was e l e c t e d p r e s i d e n t of Brazil, I was c u r i o u s a b o u t t h e r e l a t i o n s h i p b e t w e e n his a c a d e m i c b a c k g r o u n d a n d his political leadership. Sociologists have f o u n d it difficult to bridge the gap between o u r academic discipline a n d the real world of public policy. I t h o u g h t C a r d o s o ' s e x p e r i e n c e s w o u l d b e instructive in this regard, a n d I began the research that led to this book. Fortunately, I was still in c o n t a c t with my g o o d f r i e n d Gabriel Bolaffi, a Sao Paulo sociologist who has known Cardoso since their s t u d e n t days. Gabriel p u t m e in touch with E d u a r d o Graeff, o n e of Cardoso's top advisers, who a r r a n g e d a brief interview with Cardoso in August 1995. Graeff also h e l p e d m e to contact a n u m b e r of o t h e r key people, including First Lady Ruth Cardoso. I f o u n d a wealth of material in Cardoso's writings, Senate speeches, p r e s s c o n f e r e n c e s , a n d p u b l i s h e d interviews. I u s e d B r i g i t t e H e r s a n t Leoni's book, Fernando Henrique Cardoso: 0 Brasil do Possivel, as a source of s o m e material o n Cardoso's family b a c k g r o u n d a n d youthful experiences.

ix

X

Preface

When the manuscript was completed, President Cardoso read it carefully and corrected many details, even spelling and dates. He gave me a long interview in May 1998, during which he filled in some gaps about his student days and answered other questions. He did not significantly disagree with the thrust of my argument, but this is not an authorized biography, and all interpretations and opinions are my own. Significant material has been added since the draft he saw, particularly in Chapter 7 and the Epilogue. Historians generally agree that at times the traits of individual leaders have had an important impact on history. Even Leon Trotsky, committed as he was to the Marxist theory that class struggles determine history, conceded that there would have been no Bolshevik revolution in Russia in 1917 without Lenin. Historians of Cuba agree that there would have been no Cuban revolution without Fidel Castro. Enrique Krauze's new book, Mexico: Biography of Power, has brought a valuable fresh perspective to the understanding of Mexican history, and Mexicans today are increasingly sensitive to their leaders' personal character, as well as to their class backgrounds and ideological commitments. I believe Brazilian history is ripe for this kind of analysis. Important events could be illuminated by more extensive biographical analysis, such as Luis Carlos Prestes's heroic but futile march into exile in the 1930s, Janio Quadros's unexpected resignation from the presidency in 1961, and the bizarre family conflicts that sabotaged the Collor de Mello administration. These events had sociological and economic dimensions, but they cannot be understood exclusively on those levels. So too with Cardoso. Even his opponents would agree that Brazilian history would have been different without his personal impact in the 1990s. This book does not, however, give disproportionate weight to the personal or the psychological. Cardoso's intellectual and political accomplishments are evaluated on their own terms within the context of Latin American intellectual and political history. The goal is to present a well-rounded analysis of Cardoso's historical impact on Brazilian society. Cardoso was swept to power in 1994, thanks to his stunning success as finance minister in ending Brazil's hyperinflation without imposing austerity. He was reelected in 1998, despite the serious assault on his economic model. His opponent in the election, Workers' Party leader Luis "Lula" Inacio da Silva, denounced him as "the executioner of the Brazilian economy, responsible for one of the greatest economic disasters in the history of Brazil." Lula found it "almost incomprehensible that the victims voted for their own executioner." 1 Following the election, in January 1999, it seemed to many that

Preface

xi

Lula had been vindicated. Cardoso's efforts to protect the new Brazilian currency failed dramatically and the country entered into a recession. Cardoso's approval rating sank to as low as 27 percent in the polls. As Elliot Smith of USA Today remarked, "[Cardoso's] stature has gone from tall to short without time to change his wardrobe." 2 But Cardoso never claimed to have a magic solution to Brazil's problems. His most fundamental commitment has always been to democratic process. He believed that the Brazilian economy had gone into crisis because the Brazilian Congress had refused to pass the fiscal and social reforms needed to sustain his policies. He used the crisis of 1999 to persuade Congress to pass key reforms that had formerly been stymied. As this book goes to press, he is in the midst of a struggle to complete the reforms that he believes are necessary to bring Brazil into the twenty-first century as a fully modern society. The book provides the background essential to understanding this ongoing drama. I will, of course, be following Cardoso's career with great interest, and I will share my observations with readers on a World Wide Web page. T h e reader is invited to visit http://crab. rutgers.edu/~goertzel/fhc.htm for the latest update. If this address should change, look for my home page on any search engine or e-mail me at [email protected]. *

*

*

This book would have been impossible to write without the encouragement, advice, support, and gracious hospitality of Gabriel and Clelia Bolaffi, my friends from graduate student days at Washington University in St. Louis. Eduardo Graeff, of Cardoso's office, was an invaluable source of guidance and insight. Danielle Ardaillon provided helpful guidance in the use of Cardoso's prepresidential archives. I am especially indebted to Fernando Henrique Cardoso for granting me two interviews and for carefully reading and correcting the manuscript, and to First Lady Ruth Cardoso for overcoming her reluctance to talk about her husband. Pedro Paulo Popovic gave me a very helpful interview and also read and corrected the manuscript, as did Gabriel Bolaffi and Eduardo Graeff. Helpful interviews and advice were given by Bento Prado, Luiz Carlos Bresser Pereira, Beatrice Cardoso, Carlos Lema, Jorge Cunha Lima, Maria do Carmo Carmela de Souza, David Fleischer, Gustavo Franco, J o s e Artur Giannotti, Juarez Brandao Lopes, Francisco Oliveira, Helio Gastaldi, Roberto Schwarz, Paul Singer, Francisco Graziano, J o r g e da Cunha Lima, Jonas Ricardo, Jose Rosa Abreu Valle, Terrie Groth, Luiz Pedone, Claudio Ferreira Lima, Alfredo

Preface L o p e s Neto, N e u m a Aguiar, R o b e r t Wood, R o b e r t o Campos, Ivo Lesbaupin, J o e l Birman, Rebecca Goertzel, and Gilda Cardoso.

NOTES

1. Quoted in the Jornal do Brasil, October 5, 1998. 2. Personal communication. —Ted Goertzel

Chapter l

Born on a Catapult to Power, 1931-1964

O N E AFTERNOON IN THE LATE 1 9 5 0 S , A YOUNG ASSISTANT PROFESSOR NAMED

Fernando Henrique Cardoso walked into the Pom Pom Bar in Sao Paulo's university district to unwind after a meeting. He ran into a group of graduate students from the Faculty of Philosophy, Sciences, and Letters, in which he taught sociology and economic history. One of his students, then in her early twenties and only a few years younger than he, remembers a surprising comment he made: "I was born on a catapult to power." It was an offhand remark, perhaps not meant to be taken seriously. But his listener, now a prominent psychoanalyst, was struck by the quiet self-assurance with which it was spoken. In psychoanalytic jargon she sees Cardoso as a man with a "very powerful ego"—a very positive statement coming from a psychoanalyst. It means his confidence in himself is so strong that he can chart his own course in life with little need to seek psychological validation from other people. Although Cardoso has little interest in psychoanalysis, he sees himself in much the same way. He told me he has a "strong personality" and the capacity to decide things, traits he correctly believes are necessary to be a successful president of a country such as Brazil. Such personal strength is thought to develop in early childhood.

GROWING U P IN A POLITICAL FAMILY

Fernando Henrique Cardoso was born in his grandmother's house in Rio de Janeiro on June 18, 1931. His grandfather, General Joaquim Inacio, had died in 1924. His g r a n d m o t h e r , L e o n i d i a (Linda) Fernandes Cardoso, was a strong woman whose home provided a sense of stability and continuity. The Cardosos were not wealthy, but they lived comfortably in the middle-class neighborhood of Botafogo 1

2

Fernando Henricfue Cardoso

on the fashionable southern zone of Rio de Janeiro near the beach. Fernando Henrique says he was raised by his grandmother, to whom he graciously attributes his cordiality and good manners. 1 His sister, Gilda, born a year later, says "my grandmother adored him, because he was a child with a very pleasant disposition and he knew how to make himself loved. He was much admired, most of all by my father's family." 2 Fernando Henrique never knew his mother's parents, who lived in Amazonas. Being born on a "catapult to power" might also mean being born into a political family, surrounded by adults who lived and breathed politics. Cardoso readily acknowledges that the fact that the m e n in his family have been national leaders "since the days of the empire" may have given him an advantage in developing his political skills. At the same time, he quickly observes that many people without a similar family background are equally able to exercise leadership. His wife also accepts the possibility that Fernando Henrique may have benefited f r o m being raised in a political family, just as a child raised in a musical family may be given a boost toward a musical career. But she also observes that many children choose not to follow in their parents' footsteps and cites Fernando Henrique's younger brother, who took no interest in politics. Fernando Henrique Cardoso was the son and grandson of generals, yet he chose not to go into the military. He opposed the 1964 military coup d'état and devoted his political career to a struggle for civilian democracy and social reform. O n e might guess that he was rebelling against his family by turning against militarism, but that was not the case. His father, Leónidas Fernandes Cardoso, also opposed the coup d'état and had no desire for his son to go into the military. Leónidas was born in 1889 in the southern Brazilian state of Paraná, the son of a general with strong political connections. His father, G e n e r a l Manuel J o a q u i m Inácio Batista Cardoso, h a d s u p p o r t e d legalist forces against a naval uprising in 1893, f r o m which he developed close ties to President Floriano Peixoto. He also participated in a nationalist military uprising in 1922. Leônidas's brother, General Felicissimo Cardoso, was a leader of the nationalist c u r r e n t in the Brazilian Army. So it was natural that Leónidas would enlist in the army at age fifteen. He later enrolled in the School of War in Porto Alegre to begin a career as an officer. He attained the rank of second lieutenant in 1910 at age twenty-one. 3 But Leónidas was not satisfied with a military career. He, like his son after him, aspired to be a writer and began to write articles for small magazines and journals. Eventually, he was published in leading newspapers such as the Correo da Manhâ, O País, Gazeta de Noticias, and

Born on a Catapult to Power, i 9 3 Í - Í 9 6 4

3

O Globo, as was his son after him. Like his son, Leónidas sympathized with the left, and he wrote mostly about the role of revolutionary and popular movements in Brazilian history. Also like his son, he was energetic and highly intelligent, with very wide interests. He began to study medicine while still a second lieutenant and a journalist. Like his son, his career was interrupted but not permanently disrupted by political events. He put his medical studies aside to become involved in the popular agitation touched off by the Russian revolution in 1 9 1 7 . In 1919 he was p r o m o t e d to first l i e u t e n a n t , and he also entered law school. His studies were again interrupted by politics when he became involved in a military revolt in 1922 against the election of Artur Bernardes as president of the republic and against punitive measures taken by the retiring president, Epitácio Pessoa, against the military. The military rebels were forced to desist by a larger force of loyalist officers, but the i n c i d e n t was handled in a civilized m a n n e r because the loyalist officers sympathized with the idealistic young rebels. After a short period in the stockade, Leónidas was transferred to a remote post on the Amazon River. Soon thereafter he was transferred to Manaus, the major city on the Amazon, where he met his future wife, Nayde, who was from mixed Spanish and Indian descent and whose parents were small businesspeople from the state o f Alagoas. Leónidas supported a second failed democratic revolt in 1924, demanding free elections, that held the city of Sao Paulo for twenty days. When this movement also failed, he chose not to join the colorful Lieutenant Luis Carlos Prestes in the dramatic but futile march of the Prestes Column—a three-year, 24-thousand-kilometer trek across Brazil to exile in Bolivia. Instead, Leónidas again accepted transfer to the interior. T h e Brazilian o f f i c e r corps is loyal to its own, and in 1 9 2 8 Leónidas was able to return to Rio de Janeiro, where he enrolled in the juridical and social sciences program at the law school. He participated in the successful revolutionary movement in 1930 that put the nationalist regime of Getúlio Vargas into power. This participation did not force him to interrupt his legal studies. He received his law degree in 1931, the year his first child was born. The Cardosos were of Portuguese origin and were very much a part of Brazil's political establishment. Fernando Henrique's greatgrandfather, Felicíssimo do Espirito Santo Cardoso, had been a federal senator, the governor of the state of Goiás, and a leader of the Conservative Party during the Brazilian empire. Other distinguished relatives included two who had served as minister of war under differ-

4

Fernando Henricjue Cardoso

ent presidents, a president of the Bank of Brazil, a mayor of the Federal District of Rio de Janeiro, and a founding member of the National Petroleum Council. Several members of the Cardoso family accepted powerful posts in the Vargas administration in the 1930s, including F e r n a n d o Henrique's uncle Augusto Inácio, who was minister of war from 1931 to 1933. Despite these connections and his support of Vargas in 1930, Leónidas supported the 1932 Constitutionalist Revolution in Sào Paulo that sought to protect the government's legal integrity against abuses by Vargas. This revolt was also settled with a minimum of bloodshed through conciliation among members of the Brazilian establishment, which allowed Leónidas to continue to rise in the military. In 1933 he was promoted to major, and in 1934 he took a staff position in the Ministry of War. He was promoted to colonel in 1945. In 1945, when fourteen-year-old F e r n a n d o Henrique was old enough to become interested in the adult world, Leónidas retired from active military duty and joined the reserves with the rank of brigadier general. This freed him to devote his life to reformist politics, m u c h as his son did after being forcibly "retired" from the University of Sâo Paulo at a much younger age. Like his son after him, L e ó n i d a s was o n e of the f o u n d e r s o f a progressive policy research institute, the Center for the Study and Defense of Petroleum and the National Economy. And like his son in later years, he was active in the leading social movement of his time, the Petroleum Is Ours campaign. In 1954, when Fernando Henrique was twenty-three, his father was elected president of the Sâo Paulo c h a p t e r of the L e a g u e for National E m a n c i p a t i o n . And like his son after him, Leónidas ran for elected office on a progressive ticket. In 1954 he was one of two candidates for the Chamber of Deputies on the ticket of the Brazilian Labor Party, supported by the Communist Party. He was part of a group whose slogan read "from the empty pot and the dry water fountain" (da panela vazia e da bica sem água), a reference to life in shantytowns where there is little food and an unreliable water supply and residents must carry water long distances, often up steep hills. On O c t o b e r 3, 1 9 5 4 , L e ó n i d a s Cardoso was e l e c t e d federal deputy with 28,000 votes. As a politician he acted very much in the gracious, paternalistic style of the Brazilian aristocracy. Although this traditional cultural style has often d e g e n e r a t e d into corruption, Leónidas simply enjoyed doing favors for people, never expecting anything in return. Unlike his son, he did not run for reelection, and he retired from active political life when his first term of office ended in 1 9 5 9 . In his later years, "the General" was a genial man who encouraged and supported his son's friends. He was against the military March 1964 coup d'état but did not actively oppose it. When he

Born on a Catapult to Power, i 93 i—1964

5

died in August 1965, Fernando Henrique was in exile in Chile, but he was able to return for his father's funeral. Although "the General" did n o t live long e n o u g h to see it, Fernando Henrique fulfilled his father's aspirations to reform and modernize Brazilian society. Fernando Henrique learned Brazilian history by listening to his father's conversations with other officers and family members. His father loved to tell stories about the Prestes Column, which he and many other officers saw as a heroic legend. They protected Prestes w h e n h e went u n d e r g r o u n d as a C o m m u n i s t , a n d the y o u n g Fernando Henrique met with him while he was in hiding. Leónidas and his relatives, however, were not romantic revolutionaries tilting against windmills. They were practical men, dedicated to progress within the limits of the possible. Their conversations were not just about ideals and visions but also about how things could be accomplished in a political context, which they knew well from the inside. This ability to c o m b i n e idealism with practical j u d g m e n t was Fernando Henrique's most valuable legacy from his distinguished family. Fernando Henrique says, "My father was a nationalist. He never understood the class dynamics of modern society . . . he was a man of nationalist sensibility who f o u g h t in favor of the most poor." 4 Although Leónidas accepted support from the Communists when they supported Brazilian nationalism, his thinking was rooted not in Marxism but in the positivism of Auguste Comte. He, like many military officers, believed in a modern, scientific, enlightened government that would develop the country. Personally, Leónidas was a conciliatory man who listened to all sides of a r g u m e n t s a n d s o u g h t a g r e e m e n t . He told F e r n a n d o H e n r i q u e about a time in 1922 when he was imprisoned at the Fortaleza de Lajes on the coast near Rio de Janeiro. The most important thing when one is in prison, Leónidas said, is to "never forget to talk with the jailer . . . even when arrested, you must talk, never keep your adversary distant. You must always talk. And with the guard, not with the captain." Years later, F e r n a n d o H e n r i q u e visited the Fortaleza de Lajes as president of Brazil, surrounded by crowds seeking his attention. He told the admiral who accompanied him, "My father was imprisoned here." 5 Leónidas was a contented, peaceful man who never wore his military uniform at home. Fernando Henrique says, "My father never hit me or my brother or sister. Our relationship was very affectionate. My mother was more prone to anger; she had a different temperament." 6 Like most youths, Fernando H e n r i q u e modeled his political beliefs on those of his father, seeking to adapt them to the conditions of his generation. He supported the Communist Party's call for an

6

Fernando

Henritfue

Cardoso

alliance between the working class and the progressive, nationalist bourgeoisie to develop Brazil's domestic industry. At the time, the Communists and many "progressive" intellectuals believed the landed oligarchy was allied with foreign industrialists in a conspiracy to keep Brazil dependent on imported manufactured goods. The movement's greatest accomplishment was to nationalize Brazilian oil industry under the slogan "The Petroleum Is Ours." Despite the family's history, Leónidas never urged Fernando Henrique to follow him into the military. His view was toward the future rather than the past. Further, he did not urge Fernando Henrique to pursue his ventures into medicine, law, journalism, or politics. He wanted his son to be happy and successful and to contribute to building the nation. Fernando Henrique remembers that "my father was never an authoritarian. Rigorously democratic and a very open man, he was liberal and tolerant, with an absolute sense of public morality. His tolerance influenced me deeply."7 Fernando Henrique's first interests were literary rather than political or scientific. He remembers that "I, like almost everyone else, had literary aspirations."8 On a family vacation at the mountain resort of Lindóia, he met a distinguished Portuguese professor of literature, Fidelino de Figueirado, who noticed that Fernando Henrique was curious about the books he was reading and engaged him in conversation. Fernando Henrique eagerly shared his enthusiasm for the Brazilian poets of the 1945 generation, including Péricles Eugenio da Silva Ramos and Domingos Carvalho da Silva. Professor Figueirado encouraged Fernando's literary aspirations but did not share his enthusiasm for the popular contemporary poets. He encouraged him to explore more of the classic literature and suggested that he apply to the new Faculty of Philosophy, Sciences, and Letters at the University of Sao Paulo. Fernando Henrique did apply, but he was uncertain about entering the Faculty of Philosophy. He also took the entrance exam for the Faculty of Law at the university. Law would have been a more conventional choice, but he failed the Latin entrance exam for the Law School. 9 Law school would have put Cardoso in a much more conservative milieu.

STUDENT RADICALISM AND DISILLUSIONMENT

Fernando Henrique chose sociology, among the many disciplines offered at the faculty, because it allowed him to pursue his philosophical and theoretical interests while preparing to address the country's practical problems. He recalled,

Born on a Catapult

to Power, i 931—1964

7

I never had much interest in being a military man, because my father had already left the military. I had other interests. . . . I didn't know much about what the course in Social Sciences was, but I was interested in Brazilian affairs, principally because of the influence of a relative of mine, general Horta Barbosa, who had in his house a small bottle of Brazilian petroleum. We all became involved in the "Petroleum Is Ours" campaign including working with a small magazine in secondary school. 1 0

At the time, F e r n a n d o H e n r i q u e was inspired by C o m m u n i s t ideals, although he knew little about the reality of Communist social systems. When Czechoslovakian r u n n e r Emil Zatopeck triumphed in the Sao Silvestre races in 1954, Cardoso and his friends saw the victory as a symbol of the power of the socialist world, which p r o d u c e d decisive political and social changes as well as triumphant athletes. 1 1 At the time, the Brazilian Communist Party was often referred to in the superlative as the partiddo, or "the Party." Party circles were the place to be for those on the left. T h e party and its supporters saw the world as polarized between the forces of good and evil. The party's most famous leader was the heroic Lieutenant Luis Carlos Prestes. In a party manifesto Prestes divided the world as follows: On one side is Senhor Dutra [the president], with his parliamentary majority, with the large landowners and big capitalists who support him, with the leaders of all the political parties of the dominant classes, who want war, colonization, terror and hunger for the people. On the other side [are] the great laboring masses, workers and farmers, the honest intellectuals who do not prostitute themselves to the foreign oppressors or their agents in the country, the poor civil servants and soldiers, the students, the small businessmen and industrialists, in sum the great majority of our people, who want peace and liberty, who struggle for the independence of the country from the imperialist yoke. 12

Prestes's p r o c l a m a t i o n a p p e a r e d in the j o u r n a l Fundamentos, which was published in Sao Paulo. Its offices were u p the block f r o m the Faculty of Philosophy, Sciences, and Letters of the University of Sao Paulo. Fundamentos was generally known to be a Communist Party j o u r n a l , although it was n o t formally identified as such on its title page. As with Communist parties around the world, the party had a small core of disciplined members and a large n u m b e r of "fellow travelers" who s u p p o r t e d its activities in m o r e limited ways. Leonidas Cardoso, for example, was not a Communist, but he had a party adviser when he was in Congress. Fernando Henrique had a similar relationship to the party. His friend Pedro Paulo Poppovic says fellow traveler is a good term to describe Fernando Henrique's relationship to the party, although "in an intellectual sense." 1 3 W h e n asked by an

8

Fernando Henricfue Cardoso

interviewer "Were you a Communist as a youth?" Cardoso replied, "I was, not as a formal member of the party but by means of a group of youths who acted around the journal Fundamentos. In any event, that did not last long. When the Soviet Union invaded Hungry in 1956, I was already opposed [to the party]."14 Cardoso appeared on the masthead of Fundamentos for the first time in January 1952, shortly after the publication of Prestes's manifesto quoted earlier. The journal followed the political line of the international Communist movement, with condemnations of the Korean War, interviews with Stalin, and support for world peace conferences in Europe. It also published poetry, literary criticism, and the philosophical observations of Jean-Paul Sartre. The April 1953 issue waxed poetic about the death of "he who had conducted in his hands the flag of Peace and the standard of progress," Joseph Stalin. Fernando Henrique never joined the Stalin personality cult, although his name on the masthead of Fundamentos associated him with it indirectly. Throughout this period he had friends who were active in both the Stalinist and Trotskyist youth groups, but he never became affiliated with either. He was excited by the vigorous intellectual milieu around Fundamentos rather than by the prospect of joining a political organization. In the April 1952 issue of Fundamentos, Fernando Henrique published an extensive book review; this essay is the best available record of his thinking at age twenty-one. Titled "A False Portrait of Brazil," the review is of a book by sociologist Limeira Tejo entitled A Sincere Portrait of Brazil. Cardoso attacked the book on two grounds: a lack of scientific rigor and failure to follow Marxist theory. Cardoso criticized Tejo for not realizing that "the State is nothing more than an apparatus of domination, and that in a society stratified in classes (such as ours) this institution comes to be directed by the dominant class, that is, in a capitalist society it is the businessmen who exercise power (directly or indirectly)" (p. 26). Fernando Henrique agreed with Tejo's observation that Brazilian society was still shaped by its origins as a colonial, slave-owning society. He also agreed that Brazilian industry has often been concerned more with its private interests than with the national interest and that the bureaucracy has been corrupt and inefficient. He took Tejo to task, however, for not understanding that those problems were rooted in the country's capitalist economic and social structure. In keeping with Marxist doctrine, Cardoso insisted that "capital is formed by the exploitation of the labor force of the majority of the population for the benefit of a few and at the cost of general impoverishment" (p. 27). Tejo suggested that Brazil could follow the example

Born on a Catapult

to Power,

I93i-i964

9

of the United States, which under capitalism had developed a wellpaid workforce, but Cardoso insisted that We are not the United States, and we will not find ourselves under the same conditions which made possible the creation of the North American industrial park. There is no need to repeat that, in the phase of expansion of international finance capital, the industry of the underdeveloped countries is more or less dominated by groups tied to high finance and that it is in the interest of these groups to produce only products for export, as long as this order of things continues. 15 (p. 27)

At key points in his essay Cardoso relies on doctrinal orthodoxy to dismiss Tejo's arguments. He does not seriously consider Tejo's argument that U.S.-style capitalist development might be a viable alternative for Brazil. This is especially ironic since Tejo anticipated many of the positions Cardoso would support forty years later. Tejo conceded that Brazilian capitalism had many problems, but he thought the system could be reformed in a way that would raise people's living standards. In the 1990s, as minister of finance and president of Brazil, Cardoso worked hard to prove Tejo's point. In the 1952 review Cardoso relied on doctrine to assert his own points, but he mercilessly attacked analytical and historical weaknesses in Tejo's arguments. This is not surprising in an essay written by a twenty-one-year-old who was more eager to expose the flaws of his elders than to question his own newfound certainties. This phase of Cardoso's intellectual life did not last long. As he conducted more serious academic research on the history of Brazilian slavery and on the politics of Brazilian industrialists, he freely diverged from party doctrine when it was inconsistent with his findings. Cardoso was also influenced by the historical events that caused many other "fellow travelers" around the world to become disenchanted with the Soviet Union. In particular, the Twentieth All-Party Congress of the Communist Party of the Soviet Union in February 1956 caused great consternation among Brazilian intellectuals. In a "secret" speech, "The Personality Cult and Its Consequences," Nikita Khrushchev d e n o u n c e d Stalin for antidemocratic abuses against other party members. Brazilian intellectuals follow European events closely, and Poppovic recalls that the news of the "secret speech" hit the University of Sao Paulo community "like a bomb." He remembers discussing it at length with Cardoso on numerous occasions. By the time of the Soviet invasion of Hungary in October 1956, Fernando Henrique's sympathy for Soviet communism had faded. He remembers signing a petition protesting the invasion.

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During this period Cardoso was also associated with the journal Anhembi, which was edited by Paulo Duarte, a writer for Estado de Sao Paulo—one of the city's leading newspapers—who had gotten into difficulties because of his progressive politics and spent a long period in exile in Paris. Duarte traveled frequently between Paris and Sao Paulo, and Anhembi was loosely modeled on the Parisian journal Les Temps Modernes, which was identified with Sartre and his circle. Politically, Anhembi advocated "democratic socialism," which was defined fairly inclusively. It published works by leading European and Brazilian writers and scholars in all disciplines of the humanities and social sciences and was widely read for its commentary on the local cultural scene. Cardoso's first publications in Anhembi were book reviews; he then published an early report of his research on race relations in Brazilian history. He also began to publish works in a number of journals read by members of the Sao Paulo social science and literary community. Cardoso was most excited by the vibrant intellectual milieu of which journals such as Anhembi and Revista Brasiliense were a part. Historian Monica Pereira describes the environment as one in which The writers, poets, journalists and intellectuals frequented the same places—bought, read and tried to win space in the same reviews. . . . The literary and artistic life was intense in Sao Paulo at the time; everyone knew everyone else and they ran into each other at various places, such as in the Jaragua bookstore and tea room, gatherings in private homes or cocktail parties at the Automobile Club. 16

This sophisticated g r o u p of intellectuals followed events in Europe, the United States, and other Latin American countries closely. The 1959 Cuban revolution revived the hopes of many who were disillusioned with events in the Soviet bloc. Cardoso remembers that The post-World War II years in Latin America were not easy: doubt began to cast a shadow on our dreams. The faith of our elders had had to withstand the Moscow trials. For us, the tempests sowed by the Prague trials and the disclosures of the Twentieth [All-Party] Congress of the Communist Party of the Soviet Union would have been even more disastrous had it not been for one very specific event: the Cuban Revolution. Cuba was incorporated into the political patrimony of "our America" at the very moment when memory and reality were burying the great Latin saga of the Spanish Civil War, and survival left the younger generation meditating on the disquieting doubt as to the path by which socialism would be constructed. 1 7

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For Cardoso Cuba symbolized the fact that dependency on the imperialist powers could be broken. He did not believe, however, that revolution could be exported, and he was not happy with the bureaucratic socialist model the Cubans seemed to be following. The Cuban revolution was rooted in the plantation economy of the old imperialism; it did not readily apply to the more complex industrializing economies of Argentina, Brazil, Mexico, and other leading Latin American countries. Cuba was a symbol of action against repressive social conditions, but it was not a model to be followed.

BECOMING A SOCIAL SCIENTIST

If the Soviet Union and Cuba were not models for reforming Brazil, what was? Like many of his generation, Cardoso hoped a rigorous social scientific analysis might provide better answers. He remembers, "Those of us who entered the Faculty of Philosophy at the end of the 1940s were motivated by a desire to change Brazil. This was the spirit of our generation." 18 Like many people, Cardoso and his fellow students were not exactly clear on the difference between sociology and socialism, and Cardoso recalls that "what we really wanted to be was socialists, not sociologists."19 Fortunately for Cardoso and his fellow students, the University of Sào Paulo offered an outstanding, highly professional program in the social sciences. The students were "astonished and fascinated by the cacophony ( b a r a f u n d a ) of sociological ideas" presented in their classes by a brilliant g r o u p of Brazilian a n d E u r o p e a n professors. Ironically, these young would-be socialists and radical populists had Sào Paulo's businesspeople to thank for their educational opportunity. Although the left emphasized problems and inequalities, which were real enough, Sào Paulo was a boomtown that had benefited from both the world depression (which cut off imports and allowed industry to develop) and World War II (which created unprecedented demand for exports). The city's entrepreneurial elites, many of whom were Italian immigrants, were eager to raise the community's cultural level. They wanted the University of Sào Paulo to be a world-class university, so they hired a number of prestigious French professors who developed it into what one of the best students later called "a French Overseas Department." 20 One of the first French visitors was the distinguished anthropologist Claude Lévi-Strauss, whose appointment in 1934 gave him his first opportunity to conduct anthropological fieldwork with tribal peoples. Lévi-Strauss was disappointed, however, to find that Sào

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Paulo was a modern city, far distant from the tribal communities. F u r t h e r m o r e , the s t u d e n t s did n o t m e e t his expectations. He observed that they Wanted to know everything, but only the newest theory seemed to them worth bothering with. . . . Learning was something for which they had neither the taste nor the methods; yet they felt bound to include in their essays, no matter what their nominal subject might be, a survey of human evolution from the anthropoid apes to the present day. Quotations from Plato, Aristotle, and Auguste Comte would be followed by a peroration paraphrased from some egregious hack—the obscurer the better, for their purpose, since their rivals would be the less likely to have happened upon him. Our students regarded the University as a tempting, but also a poisonous, fruit. These young people had seen nothing of the world, and most of them were too poor to have any hopes of traveling to Europe. To many, we were suspect as representatives of the ruling class and beneficiaries of a cosmopolitanism which cut across the life and the national aspirations of Brazil. Yet we bore in our hands the apples of knowledge; and therefore our students wooed and rebuffed us, by turns. 21

Levi-Strauss's cynical account does an injustice to the students and to Sao Paulo, where ideas and intellectuals are taken very seriously. He himself admits that within a decade many of his students were distinguished professors. If some of the 1934 students were more enthusiastic than competent, that was emphatically not true of Fernando Henrique Cardoso's cohort. He was fortunate to have attended the University of Sao Paulo with a group that became some of Brazil's most brilliant and influential intellectuals. They eagerly read the classics as well as contemporary writings, even when the works were published in French, English, Italian, or German. The French scholar who influenced Cardoso the most directly was Roger Bastide, an anthropologist deeply involved in work on Brazilian religions. Fernando Henrique says that although Bastide was French, he "had a different formation from the French sociologists of the Durkheim school. As a Protestant, he was interested in personal, internal experience, the relations between conscience and the outside world, and he studied religion in order to understand conscience. The more objective style of Durkheim we got through Fernando de Azevedo, the senior Brazilian professor." 22 Cardoso's most important mentor, however, was a young Brazilian professor named Florestan Fernandes. Florestan had been born in 1920, eleven years before Fernando Henrique. He was the son of Portuguese immigrants of modest circumstances and had worked in a restaurant to put himself through the university, attending first the School of Sociology and Politics and later the University of Sao Paulo.

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Florestan had widely read the European and U.S. sociologists u n d e r the guidance of the French professors, who also encouraged him to get out into the field. His master's thesis, The Social Organization of the Tupinamba, became a classic, and he wrote many books on social theory as well as on various aspects of Brazilian society. Florestan had strong political c o m m i t m e n t s and had b e e n involved in Trotskyist circles, but he firmly believed in the scientific nature of social science and insisted on methodological and conceptual rigor. He was deeply committed to sociology, which he viewed as a "way of life." 23 He often wore a white laboratory jacket while working at the faculty, which m a d e him look m o r e like a chemist or a physician than a sociologist. Unlike many academics who spend their time at the computer or in the library, Cardoso's mentors were active field workers. He recalls that Florestan was very demanding. He demanded a high level of scientific work together with a concern with the national reality, and Bastide supported him in this. . . . They both emphasized research methods and wanted to do away with the essayistic tradition in sociology. Together we went into the favelas [slums] where, chewing on a cigar and struggling with his Frenchified Portuguese, Bastide made himself understood perfectly. This motivated us to have a positive attitude towards research. 24 Cardoso believes his training in anthropological field m e t h o d s gave him important skills that he used throughout his career: "This is t r a i n i n g in how to h e a r the other. To listen, to m a k e notes with patience, to ask questions a n d t h e n to ask again. Both my family u p b r i n g i n g and my professional training taught me to make every e f f o r t , b o t h with r e a s o n a n d with e m p a t h y , to u n d e r s t a n d t h e other." 2 5 Following Florestan's example, Cardoso studied the E u r o p e a n sociologists, especially Karl M a n n h e i m , Max Weber, a n d E m i l e D u r k h e i m . H e also b e g a n to r e a d Karl Marx, a l t h o u g h d e s p i t e Florestan's leftist sympathies little of Marx was included in the curriculum. The book that solidified things for Cardoso was Florestan's monograph, Empirical Foundations of Sociological Explanation; Fernando Henrique said that book "put the house in order: Marx served to analyze one type of problem, the Weberian m e t h o d . . . a n o t h e r kind, and the functionalist . . . still another." 2 6 Cardoso was interested in solving problems, especially the problem of Brazil's underdevelopment, rather than in choosing the one best or "correct" theory. T h i s was precisely F l o r e s t a n ' s a p p r o a c h . F l o r e s t a n believed "methodological debates are useless and prejudicial when they are

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purely speculative or when they are conducted with a dogmatic spirit, divorced from real scientific themes and problems." 27 He believed theoretical models should be taught along with empirical research techniques and that students should learn by carrying out actual research projects under faculty supervision while studying the theories. This educational philosophy suited Cardoso perfectly, despite the fact that he was not impressed with Florestan as a classroom teacher because he thought Florestan's lectures were too disorganized. At the end of the 1940s, when Cardoso began his studies, the Faculty of Philosophy, Sciences, and Letters was moving to a new location on Rua Maria Antonia, a busy street with garages, restaurants, bookstores, and apartment buildings on the fringes of one of Sào Paulo's nicest downtown residential neighborhoods. Nearby were Mackenzie University, the School of Sociology and Politics, the Faculty of Economics and Administration, and after 1951 the Faculty of Architecture and Urbanism. Perhaps because it was located close to where many professors and students lived, Maria Antonia, as it was known, became the center of a vibrant urban intellectual community. Not all classes were offered at Maria Antonia, however. When Cardoso began his studies in 1949 at age seventeen, most of his classes were in the Caetano de Campos building at the Praga da Republica downtown. 28 His mathematics classes were in an old building on Avenida Brigadeiro Luis Antonio, a busy commercial street. The departments of the Faculty of Philosophy were small, and students were encouraged to take courses in a wide range of fields. The first paper Cardoso wrote was on the pre-Socratic Greek philosopher Parmenides. Professor Cunha Andrade gave him a 5, not a very good grade on the Brazilian scale, which runs from 1 to 10. Cardoso was hurt, and he suspected that Cunha Andrade had not read his argument. He also had a difficult time in economics. Professor Paul Hugon taught in his native French, which made it difficult to untangle the murky complexities of the theory of value. Fortunately, the class had a Brazilian assistant, José Francisco de Camargo, who helped students through the material. This exposure to lectures in French proved userful, however, since in the second year almost all of the classes were in French. Cardoso also found some French books extremely useful because they helped him through the readings Florestan assigned. At the time, Cardoso had no idea how useful this language training would be. He first went to France when Alain Touraine arranged a postgraduate fellowship for him at the Laboratory of Industrial Sociology at the University of Paris for the 1962-1963 academic year. He went many

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other times as a researcher and a professor and even considered assuming French citizenship when the possibility of a permanent professorship at the prestigious Collège de France was suggested. Although Cardoso decided against settling permanently in France because of his rootedness in and commitment to Brazil, he closely followed French intellectualism throughout his life. He found the politics of French academia, which depended heavily on personal contacts, similar to that of Brazil and other Latin American countries. Cardoso's knowledge of French was especially useful when JeanPaul Sartre and Simone de Beauvoir passed through Sào Paulo on a Brazilian tour. The two French existentialist celebrities visited the new university campus at Araraquara, where Sartre spoke on dialectics. The newspapers reported "Sartre Preaches Revolution," much to the embarrassment of the local host. Cardoso found he could translate for Sartre, in spite of his limited ability to speak or write French, because he understood the ideas Sartre was expressing. Sarte and de Beauvoir were favorably impressed with the young sociologists and economists they met. In her memoirs de Beauvoir wrote: The more we got to know them, the more warmly we felt toward the Brazilian intellectuals. Conscious of belonging to a country on the way up, with the whole future of Latin America dependent on it, their work was for all of them a battle to which they had committed the whole of their lives; their curiosity was vast and insatiable; since they were on the whole very cultured and had quick minds, it was profitable and pleasant to talk to them. 2 9

In 1951, the last year of his u n d e r g r a d u a t e studies, Cardoso worked as a research assistant in the Faculty of Economics for the Chair of Administrative Science. He worked under the supervision of Lucila Hermann, who was beginning to study industrial labor power in Sào Paulo. The following year, when he was only twenty-one and had not yet graduated, Cardoso was asked to teach a course under the Chair of Economic History held by Professor Alice Canabrava. He remembers, I had to extend myself to offer a course on the Economic History of Europe. I knew little of this history, although I had read much of Weber and something of Marx. Professor Alice made me work furiously in the archives and concluded, at the end, that I would make a fine intellectual of the essayistic tradition (like Antonio Candido, she said, much to my satisfaction), but that I would never be a researcher, the vocation which she most valued. 30

Antonio Candido was already famous as a writer and literary critic when Cardoso entered the university, although he was only a young

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associate professor. Fernando Henrique's attraction to the literary world had been stimulated by a Literary Congress in Sao Paulo shortly before the semester began where he put faces to many of the writers he had known previously only as names on title pages. Candido wore pince-nez glasses and double-breasted jackets and made a strong personal impression. He was known for his firm positions on social issues and his advocacy of educational reform. His classes, however, did not touch on the social issues the students were most interested in, although he did explain Weber to them. The social scientists at the University of Sao Paulo were not eager to have their students imitate Candido's literary style. They wanted to go beyond the Brazilian intellectual tradition of writing long impressionistic articles that displayed great literary polish but little solid research. They wanted to conduct rigorous empirical studies in the tradition of Emile Durkheim in Paris or the urban sociologists at the University of Chicago. Cardoso did not disagree with this goal, but he seemed to have more talent and inclination for writing essays and interpretative books. He enjoyed fieldwork, which allowed him to get out and talk to people. Despite the initial poor grade on the paper on Parmenides, Cardoso did very well in his course work. He received his undergraduate degree in 1952. That same year he married Ruth Correa Leite, an anthropology student from Araraquara, a market town in the rich agricultural interior of the state of Sao Paulo. Cardoso was dazzled by Ruth's beauty and intelligence, but it took longer for her to see him as more than a friend and study partner. Ruth says, "Our meeting was not at all romantic; we were antiromantic." They studied together and went to museums and other activities. The first time they went to the theater Fernando Henrique wore a gray suit and tie, which Ruth found unattractive. "He was no great seducer, I can guarantee that," she remembers. 3 1 Ruth was particularly gifted in one field that caused Fernando Henrique difficulty. He remembers that "to pass the exams in mathematics, I had to turn frequently to my wife—at that time she was my girlfriend—who knew a lot of mathematics and statistics. She had to give me private lessons . . . because at that level I had a great deal of difficulty understanding mathematics." 3 2 His statistics courses were rigorous mathematically, with a strong foundation in the theory of probability, but no one taught the students how to use those statistics to analyze social data. Cardoso regards this lack of statistical and quantitative training as a major weakness in his education, which he tried to fill in as well as he could later. He is not a "qualitative" sociologist who disparages "quantitative" information; nor does he prefer abstract ideas to specific facts or details. He likes working with facts

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and details, including numerical ones, and is good at keeping track of them. He keeps his books and papers well organized and always knows where everything is. He simply never had the necessary training to do rigorous statistical work. Ruth's mother, who had obtained a doctorate in botany after she was a grandmother, was a professor at the pharmacy school at Araraquara. This achievement greatly impressed Fernando Henrique, who admired women who pursued their own careers and interests. From the start, his and Ruth's marriage followed the two-career pattern that was becoming the norm for progressive young intellectuals of their generation. Ruth completed her doctoral degree and pursued a career as a university teacher, although like most wives she also took primary responsibility for the house and children. Household servants were relatively affordable in Brazil, and Fernando Henrique did not have to help with child care or household chores. In 1953 Cardoso received a post as a teaching assistant in the Chair of Sociology. He continued to work there through the 1950s as he pursued his graduate studies and began work on his doctoral thesis on the history of slavery in the state of Rio Grande do Sul. The graduate curriculum included very little Marx. At the time, Marx was thought of as the property of the leftist political parties, which used his writings as dogma, and his work was not widely incorporated in university curricula in France or Brazil. Yet more than any other theorist Marx seemed to speak directly to the problem of transforming an underdeveloped society. Cardoso and his colleagues were not satisfied with reading a few of Marx's more accessible journalistic works, which were usually read by party activists; they wanted to undertake an intensive study of Marx's scholarly works. In 1958 Fernando Henrique's friend José Arthur Giannotti returned from studying philosophy in France where he had participated in a discussion group called Socialism or Barbarism that focused on Claude Lefort's writings on the bureaucratization of the Soviet Union. He queried a number of his friends about starting a similar group in Sào Paulo. Fernando Novaes suggested that rather than discuss interpretations, they should go back to the original and read Marx's magnum opus, Das Capital. This appealed to Giannotti, whose training as a philosopher had prepared him to intensively analyze complex texts. The group formed a Marx Seminar that met every two weeks in one of the members' homes. The Marx Seminar has achieved almost mythological importance in Brazilian intellectual history because of the tremendous productivity and influence of its alumni. 33 The seminar members were recruited from a variety of disciplines so they could critique Marx's work from different perspectives. Perhaps the most central participant was

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Giannotti, who later became a major interpreter of Wittgenstein as well as the long-term administrator of a leading think tank. He and his colleague Bento Prado, who later became one of Brazil's bestknown philosophers, analyzed everything carefully and logically. Their philosophical proclivity for a close reading of texts brought a tone of careful, patient analysis. Economics student Paul Singer, an immigrant from Austria, was recruited because of his background as a labor organizer and his understanding of socialist and nonsocialist economics; he also provided a careful reading of the original German text. Singer has become a leading economist at the University of Sao Paulo and a frequent commentator in Brazilian newspapers and magazines. Cardoso's wife, Ruth, provided an anthropological perspective. There were numerous sociologists, including Otavio Ianni, who was later Cardoso's collaborator on his first book and became a leading sociologist of race and politics; Francisco Weffort, who became a prominent intellectual and the minister of culture in Cardoso's administration; Juarez Brandao Lopes, who became a distinguished specialist in labor history and held an i m p o r t a n t position in the Ministry of Labor in Cardoso's administration; and Gabriel Bolaffi, who became a specialist in housing policy. The most regular participants were Giannotti, Novaes, Singer, Ianni, and the Cardosos. A number of participants were students when the group began. Although the group became known as the Marx Seminar, it was much broader than that; it was formed for intellectual and scholarly reasons, not because most of its members were leftists or Marxists. Only two participants, Otavio Ianni and Francisco Weffort, were close to the Communist Party at the time. Others were active leftist opponents of the Communist Party. Still others were not concerned with politics at all. Marx was selected as the first author to be studied because his works were completely ignored in the university curriculum and because the group's members knew the Communist Party had presented his work in a limited and distorted way. After Marx, the major focus was on John Maynard Keynes. Other Marxist thinkers, such as Rosa Luxemburg and Hilferding, were included because of their contributions to Marx's theory of imperialism. Again, the members read the authors' serious academic works rather than political tracts. The group began at a time when many Brazilian intellectuals were focusing on national policy options, especially issues of economic development. This was particularly true of intellectuals based in the city of Rio de Janeiro, which at that time was the national capital and the center of much of the country's economic and intellectual life.

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President Juscelino Kubitschek had begun to build Brasilia, and he promised a dramatic leap forward in social and economic development. Many intellectuals threw themselves into his projects and into debating the country's short- and moderate-term future. T h e city of Sao Paulo was somewhat isolated f r o m this fervor, although its businesspeople were hard at work building it into Brazil's dominant economic center. Compared with those in Rio, Sao Paulo intellectuals were often concerned more with scientific theories and fundamental research than with day-to-day policy issues. In keeping with this ethos, the members of the Marx Seminar decided to go back to the basics and read not just the first volume of Das Kapital, which was published during Marx's lifetime, but the two posthumous volumes as well. This was a formidable task few Marxists anywhere have ever completed. The group also read and analyzed Marx's classic work of political sociology, The Eighteenth Brumaire of Louis Bonaparte, which many believe to be his finest work. This book, rather than Das Kapital, is the m o d e l f o r F e r n a n d o H e n r i q u e ' s a p p r o a c h to social science. Like Cardoso's work, The Eighteenth Brumaire is a study of a specific historical conjuncture rather than an attempt to build general theory. In it Marx analyzes the class conflicts, political parties, and ideologies that led to the tragic failure of the French Revolution in 1848. He argues that the revolution failed because of the peasants' inability to organize themselves to express t h e i r own interests, which allowed an authoritarian demagogue to rule over them. Marx argues that in the f u t u r e , socialist leaders must branch out f r o m their urban base to organize the peasantry. This lesson was followed by Lenin a n d the leaders of the Russian C o m m u n i s t Party, who organized an alliance of workers and peasants—the h a m m e r and the sickle—to win power. Cardoso and his friends knew that Brazil in the 1950s was not France in the 1840s, and they knew the Leninist revolution had led to Stalinist d i c t a t o r s h i p . W h a t they o b t a i n e d f r o m The Eighteenth Brumaire was a m e t h o d of analysis r a t h e r than answers to Brazil's problems. They p u r s u e d this methodological interest by reading recent philosophical works on the logic of dialectical analysis, including History and Class Consciousness by Georg Lukacs and Search for a Method by Jean-Paul Sartre. These philosophical works were challenging and provocative, and they informed Cardoso's thinking. His interest, however, was always in the policy issues rather than in the methods as ends in themselves. Later he became a policy intellectual much like those he and the other Sao Paulo intellectuals had looked down on for their lack of

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academic sophistication. At the time, however, Cardoso remembers thinking that the specialists at the Institute of Advanced Brazilian Studies (ISEB) in Rio Were not very rigorous. They did not have our academic baggage which young people, as we were at the time, valued very m u c h . These people had a very voluntarist and subjectivist vision of history. For ISEB, the people were the subject of History, whereas for us the subject was u n d e t e r m i n e d . W h i l e we t h o u g h t o f classes, I S E B thought of people. We were, one could say, an academic left. The truth is that, in practice, ISEB had a much greater influence than our group, which remained isolated in Sao Paulo. . . . Today [1985], I think that ISEB perceived many important things, even though they used categories different from ours. 3 4

At the time, Fernando Henrique and his friends were also very much involved with issues within the University o f Sao Paulo. As Roberto Schwarz, an eminent essayist and literary critic who was one of the younger members of the Marx seminar, recalls, the young professors who started it "wanted to stir up the faculty. They wanted to promote a more critical point of view, and also a higher level of scientific thought." 3 5 Cardoso had not been involved in student politics because at the time his interests were more cultural and intellectual, but as a young professor he became active in the university's political life. He was elected to the University Council, and he generally advocated higher academic standards and more openness to new and progressive ideas. He was part of a faction that was opposed by older and more conservative professors, many of whom were less distinguished than Cardoso's group but had been at the university for a long time. Often, the conservative position was defended by professors from the Law School, whereas the progressives were based at the Faculty of Philosophy, Sciences, and Letters. Perhaps because of the ideological tensions within the university, Cardoso allowed little of his interest in Marxism to be expressed in his teaching, a fact that disappointed some of his students. Emir Sader, who studied with both Cardoso and Otavio Ianni, observed that "both seemed so disciplined by the positivistic norms of sociology that I felt an abyss between the brilliance of their words at public lectures, in articles (generally in the review Brasiliense), or even in conversation, and the tedium o f t h e i r courses on I n t r o d u c t i o n to Sociology, dominated by the works o f North-American functionalists."^ T h e Marx Seminar never met at the university, and some older professors felt excluded. The members, however, continued to hold their regular classes and activities at the university. By no means was

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their education limited to Marxism; they studied and taught empirical research methods and a wide variety of social theories. Cardoso f o u n d Sartre's works on the logic of analysis particularly helpful in thinking through ways to apply Marxist ideas to contemporary problems. O n e of the group's major impacts was to elevate Marxism—within the university and within Brazilian intellectual circles in g e n e r a l — f r o m a dogmatic party doctrine to a m a j o r academic theory. T h e focus, however, was not on developing the theory itself but on using it f o r empirical and intellectual work. N o n e of the participants became a professional Marxologist; each specialized in a contemporary field of study. Rather than study Marx as an authority, the members wanted to make new scientific breakthroughs—to do the kind of work Marx might have done if he had lived in their time. As Cardoso observed in 1985: My background is Marxist, but Marx wrote a book about capitalism in the 19th century. . . . The class structures which Marx described in his works, to which Marxists continue to be faithful, are the structures of competitive capitalism. Today we live in an oligopolistic capitalist society which is industrializing part of its periphery. What interested me, and what still interests me, is to respond to the question: what have been the results of this?37

DOCTORAL RESEARCH

A t this point in his life, Cardoso did not expect to go into politics; his goal was to be a professor at a leading Brazilian university. T o achieve this goal, he had to publish books that would be recognized as significant contributions to knowledge. Such serious scholarly work seldom leads to a career in electoral politics, even f o r specialists in political science who have a great deal of relevant knowledge. Academic work is often abstract and theoretical, with little direct applicability to practical politics. Academic research is often focused m o r e on the past than on current events or the future because m o r e information is available about events that o c c u r r e d at least a f e w years ago. In Cardoso's early academic work he was p r e o c c u p i e d with abstract philosophical concerns about the difference between dialectical and functionalist methodologies, which had little relevance outside academia. A n d his first serious work was on a historical topic, slavery in nineteenth-century Brazil. This made sense f o r an academic career but had little direct application to current politics. But C a r d o s o tired o f p h i l o s o p h i c a l and t h e o r e t i c a l debates because they contributed little to his understanding of what was actu-

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ally going on in the world. He was eager to contribute to ongoing political debates, which often meant publishing his work quickly even though it had not been completely validated by rigorous research. Cardoso's most important books have been influential because of their timing and because they introduce new approaches to issues; they have not been definitive treatments of their topics backed up with exhaustive historical, documentary, or statistical data. Cardoso had no principled objection to such scholarship; he just did not seem to have the time for it. Like many young academics, Cardoso began his career working on a project defined by his senior professor. His first book was a study of Color and Social Mobility in Floriandpolis, published in 1960. It was coauthored with his friend and fellow student Otavio Ianni; Cardoso wrote the first 150 pages and Ianni the last 80. The introduction was by their mentor Florestan Fernandes, who had supervised their fieldwork as part of a study of race relations in a number o f Brazilian cities. The research was funded by the United Nations Educational, Scientific, and Cultural Organization, which was interested in learning more about Brazil as an example o f a successful multiracial democracy. In fact, Florestan did not believe Brazil deserved its international reputation in this respect. Brazil differs from North American and European countries in the way racial differences are conceptualized. Instead of dividing everyone into "white" or "black," as is done in the United States, Brazilian culture recognizes many finer distinctions and mixtures. In the Brazilian census, many more people classify themselves as "mulatto" than as "black." Despite this difference, racial prejudice and discrimination are common, and in some ways they may be even worse than is the case in countries where the problem is officially recognized and compensated for. Florianopolis, the lovely beachfront capital of the southern state of Santa Catarina, was included in the study because it is a region in which tropical products cannot be grown and slavery has never been central to the economy. Santa Catarina also has an exceptionally rich amount of ethnic diversity, with large German, Italian, and Polish populations. If racial democracy were to be found, it would be more likely in a place like Florianopolis than in the impoverished northeast section of Brazil. Cardoso and Ianni made a two-week trip to Florianopolis in July 1957. They spent the first week interviewing informants from different status groups in the community and observing race relations in various institutional structures such as work, school, neighborhoods, dances, and sports. The second week they distributed questionnaires

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to 522 white and 20 mulatto schoolchildren. The questionnaire had been prepared in advance as part of the larger study of several cities. Cardoso and Ianni divided the writing into two parts, with Cardoso covering the socioeconomic history of the state and Ianni writing about current racial attitudes. Cardoso's chapters were based on an extensive review of the published literature on Santa Catarina. His account is fairly thorough and includes tables of economic and demographic statistics, as well as descriptive historical accounts. Slavery was a comparatively weak institution in Santa Catarina because the temperate climate did not support plantation agriculture. Blacks made up less than 10 percent of the population, and even under slavery they held a variety of occupations, although the majority were laborers if male or domestic servants if female. Cardoso documented the oppressiveness of slavery, but he was not content to make a moral statement. He struggled to understand how the system sustained itself. Slaves were not permitted to maintain stable family relationships, and they were often abused and mistreated; nevertheless, there was no organized opposition to slavery. Some slaves escaped; others managed to achieve social mobility by learning skilled occupations. When abolition came in 1888, it caused little disruption to the social structure. Most blacks continued to work at the same kinds of jobs and to receive subsistence wages. A small black middle class had been developing before abolition, and it continued to grow slowly afterward. Racial ideologies actually became more important after slavery had been abolished because there was no legal basis for subjugating blacks. Sociologically, blacks and whites related to each other as if they were members of dominating and dominated social classes, although there was no need for this in the fundamental economy of the state. It was a matter of whites lording it over blacks rather than of plantation owners exploiting field workers. The questionnaire data Ianni analyzed confirmed that a strict color line was maintained, with blacks excluded from social events such as dances. There were strong norms against intermarriage, which rarely took place. Among the people of color, a belief persisted in the value of "whitening," and light-skinned mulattos had more status than darkerskinned blacks. People of color strove to advance their position within the existing social order rather than protesting or agitating for change. Color and Social Mobility in Florianopolis w o u l d b e a s t r o n g e r b o o k if

the authors had had more time to do fieldwork. The questionnaire data are from a very limited sample and may reflect the opinions the respondents thought were proper rather than actual behavior. The

24

Fernando Henrique

Cardoso

two sections of the book mesh together fairly well, and the conclusions do a good job of integrating historical information with the survey and observational data. Cardoso and Ianni were surprised to find that patterns in Santa Catarina were much like those elsewhere in Brazil despite the fact that the economic history was different. This discovery conflicted with the historical materialist perspective they brought to the study. They concluded that racial ideologies were national rather than regional and that they reflected the economic structure of the country as a whole rather than that of specific regions. Many of their observations were similar to those made by Limeira Tejo in the book Cardoso had criticized in Fundamentos as insufficiently Marxist. Cardoso and Ianni reported their findings honestly even when they did not fit their theoretical expectations. C a r d o s o ' s n e x t b o o k , Capitalism and Slavery in Southern Brazil, was

also part of the project on race relations. This book focused on the state of Rio Grande do Sul, a larger and more important state than Santa Catarina but also one in which slavery and plantation agriculture had been economically p e r i p h e r a l . T h e book was written between January 1960 and June 1961 and served as Cardoso's doctoral dissertation. It is his most thorough academic monograph. Cardoso wrote this book on his own, and Otávio Ianni did a book based on data from the state of Paraná. In one sense this state-by-state division of labor may have been unfortunate, since the most important issues addressed were not specific to any one state and working together might have led to a more complete analysis. But the focus on the specifics of each state did bring in much factual information, which contrasted with the more theoretical, European-oriented approach of many intellectuals of the time. According to historian Carlos Guilherme Mota, a student at the University of Sâo Paulo at the time, Cardoso and Ianni were "in 1960 and 1961 a breath of fresh air in Brazilian leftist thinking." According to Mota, a spirit of competition always existed between Fernando Henrique and Otávio. This may have been provoked by Florestan Fernandes, who praised Otávio's industriousness to Fernando Henrique while goading Otávio about Fernando's brilliance. Dissertation defenses in Brazil are a major social ritual. They are typically conducted by four or five distinguished professors, several of whom are invited from other universities and even from abroad. Each professor takes as long as half an hour to give reactions to the dissertation, then the candidate responds to each one. The room is packed with graduate students, faculty members, and interested onlookers. Cardoso's defense was a great success. Mota says he "impressed every-

Born on a Catapult to Power,

i93i-i964

25

one with his rigor, c o m b i n e d with field research and the seriousness which he b r o u g h t to university life." 3 8 Perhaps because of Florestan Fernandes's goading, Cardoso developed a reputation as a brilliant intellectual, whereas Ianni was considered a bit of a p l o d d e r (pe-de-boi). If so, Ianni was misjudged. His s u b s e q u e n t scholarly works on race relations and o t h e r topics s h o w e d h i m to b e a b r i l l i a n t a n d r i g o r o u s scholar. H e may have w o r k e d h a r d e r in g a t h e r i n g observational data than did C a r d o s o . Ianni analyzed the questionnaire data for the b o o k on Florianopolis, w h e r e a s C a r d o s o ' s c o n t r i b u t i o n was b a s e d o n e x t e n s i v e l i b r a r y research and analyses of census data. Both sections show a lot of hard work as well as creative thought, and they might have benefited f r o m less rivalry and m o r e synthesis of the authors' different work styles. Ianni c o n t i n u e d to publish important work o n Brazilian race relations after Cardoso had moved on to other topics. T h e r e may have b e e n some lasting resentment on Ianni's part over the earlier collaboration. W h e n Cardoso was elected president, Ianni told a reporter, "I have n o t h i n g to declare about Fernando Henrique." 3 9

DIALECTICAL THINKING

Capitalism and Slavery in Southern Brazil begins with an introductory section on dialectical sociology. T h e dialectic is a difficult metaphysical c o n c e p t that Marx took f r o m Hegel, and Marxist scholars differ as to its importance. Cardoso did not want to get b o g g e d down in philosophical terminology, and he suggests that his readers could skip this section (which had to be included in a dissertation) without missing anything essential. A l t h o u g h Cardoso's discussion of dialectics is not an important p h i l o s o p h i c a l c o n t r i b u t i o n , it is v a l u a b l e b i o g r a p h i c a l l y f o r t h e insight it gives into how his reading of Marx shaped his thinking in later life. In Cardoso's summary, dialectical sociology is described as the study o f the " c o n c r e t e totality" of a social system. It d o e s n o t m e a n taking a particular p o i n t o f view but, rather, l o o k i n g at the essential differences that create a unity of a social system. T h e dialectical analyst looks at the reciprocal interaction between thought and material reality and uses terms that are specific to the historical situation b e i n g studied. Cardoso took special pains to distinguish dialectical analysis f r o m functionalism. Functionalists look at each part of a society's contributions to the whole as a stable system. By contrast, dialectical analysts view social systems as emerging, developing, c h a n g i n g entities; they

26

Fernando

Henricjue

Cardoso

focus on the essential, underlying meaning of events rather than on their superficial, conscious manifestations. This often means a focus on economic differences r a t h e r than on ideas or political actions. There is an interaction between ideal and material factors, however, and one cannot assume that everything is determined by the economic structure. O n e can see that Cardoso's thinking for the rest of his life was shaped by this dialectical approach to knowledge. In his intellectual w o r k h e c o n s i s t e n t l y f o c u s e s o n t h e totality of a social system (whether a country, a region, a state, or a city) in a particular historical epoch. In his political thinking Cardoso focuses on the potential for change inherent in a system at a specific point in time. He understands that ideas and leadership can make a difference if they take objective conditions into account. Cardoso was never the kind of Marxist scholar who repeats arguments Marx made in the nineteenth century. Rather than defending Marx's ideas, Cardoso built on and went beyond them. The theoretical goal of Capitalism and Slavery in Southern Brazil was to demonstrate the strength of dialectical sociology in a case study. Cardoso began with a historical overview of the role of slavery in Rio Grande do Sul. Slavery was unimportant in the earliest days of colonization of the state because the economy was based on rounding u p indigenous wild cattle. This kind of work was best d o n e by cowboys who worked on their own initiative and without supervision. Slavery became important when some landowners began to develop a jerked beef industry, which involved much meat processing. Manpower had been short t h r o u g h o u t the history of the state, and slavery was the most practical way to obtain a labor supply for such work. Violence and the use of armed power were strong cultural traditions in the frontier state, and they were used to control the slave population. Cardoso was especially interested in the forces that led to the demise of slavery as a mode of production in Rio Grande do Sul. He observed that slavery had been introduced for capitalist purposes and not as an example of a precapitalist social formation as one might argue if one mechanistically applied Marx's theory of the stages of h u m a n d e v e l o p m e n t . Slavery b e c a m e less attractive to capitalists when technology improved and more skilled labor was needed. Slaves were poorly motivated a n d r e q u i r e d m o r e supervision t h a n f r e e laborers, who also produced more. This fact was noticed by community leaders, the more progressive of whom thought progress and modernization required the abolition of slavery. Cardoso was particularly eager not to portray blacks as passive victims of economic arrangements but to understand them as h u m a n actors taking the initiative to manipulate and change the system. He

Born on a Catapult to Power,

1931—1964

27

observed that some blacks became artisans, which revealed their potential as full human beings. Cardoso quoted poetry written by white women expressing jealousy over their husbands' colored lovers, and he recited stories of sexual triangles involving black and white lovers of women of color. Cardoso's book was an academic thesis, so it was loaded down with Hegelian-Marxist phrases such as "the negation of the situation" and "the material organization of production," which made it less r e a d a b l e t h a n it might otherwise have b e e n . For example, he observed that as a result of economic and cultural trends: The objective possibility of the negation of the situation of the slave developed. Acting as non-slaves, the blacks could develop some critical consciousness and the whites could perceive, in the very action of the slaves, the fallacies built into the beliefs which they had constructed about blacks and slaves. Thus, a change in the material organization of production created the potential for intellectual understanding of the humanity of the slave. To be sure, the development of this new form of production, and the new consciousness of human capabilities which it engendered (as a consequence of the discovery by the white that the slave was a human being equal to himself), were not two distinct moments of a process, but inseparable parts of the same process. 40

Cardoso could have written this book in simpler language, which would have given him a wider readership without losing any essential points. His basic point was simply that as society became more complex, black people moved into roles that allowed them to develop abilities similar to those of white people. As both black and white people observed this phenomenon, the ideological rationalization for slavery weakened. Abolition took place nonviolently in Brazil as the country's leaders reacted to both international pressures and domestic economic trends. This did not mean racism had ended; prejudice and discrimination continued. But Cardoso did not see this as entirely the result of irrational factors. He observed that many racial stereotypes were based, at least in part, on true behavioral differences. This meant they could be changed, and he quoted passages from black newspapers that exhorted blacks to elevate their standing in the community by improving their standards of behavior. Blacks responded in different ways to the conditions in which they f o u n d themselves. T h r o u g h o u t the slave period some had rebelled and attempted to escape. Many resisted the pressure to produce as slaves, thereby making slave labor less effective economically. Others developed skills and sought opportunities to work as craftspeople. Some women formed sexual liaisons with white men and

28

Fernando

Henrique

Cardoso

raised mulatto children. Some adopted an ideology of whitening and tried to make their appearance and behavior as similar as possible to those of white people. Others adopted an ideology of negritude, a form of antiracist racism that extolled the superiority of blacks. The result was a unique pattern of race relations in Brazil that was different from that which evolved in other countries with different histories. Cardoso offered no apologies for the racial oppression of the system, but he also did not overlook the potential for change within it. A parallel exists between Cardoso's analysis of the dissolution of slavery in the nineteenth century and his analysis of the military regimes of the 1960s and 1970s. In both cases he applied a dialectical logic, seeking the potential for change within the system. Although Cardoso was strongly opposed to the military dictatorships, he did not allow that attitude to interfere with his judgment. When the military regimes showed signs of evolution toward democracy, he was quick to recognize them. His approach was rooted in Brazilian history and cultural traditions, and it differed from that of many of his colleagues who were influenced more by European models. As a national culture, Brazilians are inclined to work things out informally without going to ideological extremes. Cardoso's family background also helped him to understand that most Brazilian military officers were patriots who put the interests of the country ahead of abstract ideological principles, although they were not above using ideological rhetoric to defend their institutional interests.

ECONOMIC AND POLITICAL ANALYSIS

Cardoso's next book was Industrial Entrepreneurs hip and Economic Development in Brazil. Its date, April 1964, was also the date of the military coup d'état that overthrew the elected Brazilian government. When a historical shift of this kind occurs, the delays inherent in the publishing process can cause a writer to be caught with his or her biases exposed, revealing wishful thinking that has been disproved by the time the book appears. This happened to U.S. sociologist Irving Louis Horowitz whose book Revolution in Brazil, which came out at the same time, heralded an imminent socialist revolution. Cardoso was more fortunate. His book, based on interviews conducted in 1961 and 1962 and written in 1963, was right on target. The book had multiple purposes. It served as Cardoso's "thesis of livre docência," a requirement for moving up to a status roughly equivalent to that of associate professor at a U.S. university. Politically, the book was important because it addressed a key assumption of the Brazilian Communist Party. Following a traditional Marxist formula,

Born on a Catapult to Power, 4 931-4 964

29

the party and many of its fellow travelers believed Brazil needed to complete its bourgeois capitalist revolution before it could move on to socialism. The party thus favored encouraging Brazilian businesspeople to rise u p against i n t e r n a t i o n a l c o r p o r a t i o n s a n d large landowners and to develop an independent national industrial economy. This policy was supported by many influential intellectuals who were n o t Marxists or socialists, i n c l u d i n g Hélio J a g u a r i b e a n d Guerrero Ramos of the Institute Superior de Estudos Brasileiros and economist Celso Furtado. Nationalism was very important in Brazilian politics in the early 1960s. Many leftists and populists believed the only way for Brazil to break out of underdevelopment was to break its economic links to the imperialism of the United States and Western Europe. As Cardoso observed: The Instituto Superior de Estudos Brasileiros and the Communist Party dominated the intellectual scene. For different reasons, they both agreed on one point: there should be an alliance between the workers and the businessmen, under the hegemony of the latter. The State was the axis which would make this joining of forces possible. For this reason, they sought to win control of state agencies to use them to change society. Celso Furtado also supported this view, although with more hope for the State than for the bourgeoisie. For him, the demiurge should be the state employees, while for Hélio Jaguaribe it should be the Schumpeterian entrepreneur. I undertook to verify if this hypothesis were or were not valid. I found only two businessmen—the old José Ermirio de Moraes and Fernando Gasparian, whom I interviewed at length—who had a vision which coincided with this expectation of a national business elite which would create the internal market and the agrarian reform, and use the State to create conditions for development. 41 A l t h o u g h Industrial

Entrepreneurship

and Economic Development

in

Brazil was motivated in part by this debate with the Communist Party and the ISEB, it is much richer than a political tract. The book showed the influence of Cardoso's year of study at the Laboratory of Industrial Sociology in France, as well as his work with distinguished French industrial sociologist Alain Touraine during the latter's period as a visiting professor at the University of Sào Paulo. The book begins with a review of the ideas of a group of leading economists and social scientists—Joseph Schumpeter, W. W. Rostow, Werner Sombart, Ralph Dahrendorf, Adolph Berle, and Talcott Parsons—whose work was strongly opposed to Marxism. These writers argued that the future would be one of modern and successful industrial societies organized along capitalist lines. Cardoso noted that they placed great reliance on the industrial entrepreneur as the demiurge of economic develop-

30

Fernando

Henricfue

Cardoso

ment. They thought e c o n o m i c success would c o m e from allowing entrepreneurs to do their work, free from state constraints. Cardoso was not sure whether this would work in underdeveloped countries such as Brazil that had to compete with developed countries and that had relied on state investment for much of their initial industrial development. He thought the classical economists were wrong to view economic forces as abstract, impersonal variables that acted i n d e p e n d e n t o f the individuals who carried them out, observing that "the final guarantee of the success of a developmental path always depends on collective human action, which can fail." 4 2 Some sociologists specialize in one part of society, such as education, race relations, or population trends. Others focus on improving and perfecting a particular theory or research method, which they apply to a variety o f topics. Rather than either o f these approaches, Cardoso focused on the sociology o f the current historical period. He was interested in the present Brazilian politics, economics, culture, and social life and in how they might develop in the short and immediate term. He believed people had the freedom to shape the future, and he wanted to help shape it in positive directions. In many ways Cardoso's interests were similar to those of serious j o u r n a l i s t s , such as those who write f o r p u b l i c a t i o n s such as the Economist or Le Monde Diplomatique. Leading Brazilian newspapers and magazines publish much high-quality journalism, and Cardoso had little difficulty finding publishers for his work. He was less sure of how to apply his training in academic sociology to this kind of work. O n e could simply use social science terminology to describe Brazilian experiences, but in this case "scientific work would be reduced to reproducing in more elaborate language that which occurs on the level of perception." 4 3 Cardoso had done this when he had to for his doctoral dissertation, but he had little interest in continuing to write that way. Cardoso did not solve the problem o f how to reconcile abstract theory with the unique issues of specific historical conjunctures. He found the sociological variables did not perform in predictable ways from o n e historical period to another. S o m e variables were more important at one time, others at another. What was important was not j u s t the variables but the u n i q u e ways in which they fit together. Sociological theory offered a framework for analysis but little help in filling in the specifics. 44 T h e p r o b l e m was that real life was m u c h m o r e c o m p l e x and unpredictable than any academic theory. Attempts to fit history into the straitjacket o f academic typologies could lead to u n f o r t u n a t e political errors. In the early 1960s, for example, many Brazilian social

Born on a Catapult to Power, l 931—1964

31

scientists who applied Marxist theory concluded that the possibilities f o r d e m o c r a t i c r e f o r m w i t h i n a capitalist f r a m e w o r k h a d b e e n exhausted. T h e only alternatives, they thought, were socialist revolution or fascist repression. With hindsight, these theorists were tragically wrong. Real possibilities for democratic reform and economic growth did exist within a capitalist framework. Rather than helping, their theory misled them precisely at the time when good j u d g m e n t was needed most. The real crux of the problem was political rather than economic. What was n e e d e d was better leadership. T h e moderate leaders who wanted to preserve the democratic system did not trust each other e n o u g h to u n i t e on a c o m m o n policy. T h e y f e a r e d a victory by extremists on o n e side or the other. 4 5 Most of the businesspeople Cardoso interviewed, f o r example, "feared that C o m m u n i s m was imminent, and believed that agrarian reform was equivalent to the e n d of the world." 4 6 In fact, the Communist movement was strong only a m o n g students and intellectuals, and the country could easily have handled sensible agrarian reform. Brazil was headed for a political disaster, and the academic theorizing was making things worse by distorting and exaggerating the nature of the problems. Similarly, the reality among industrialists was more complex and varied than any of the theories had led anyone to expect. Many firms were family controlled, and those firms tended to limit the scope of their operations so the family could keep control. There was conside r a b l e e t h n i c a n d r e g i o n a l diversity, with some firms r u n by old Brazilian families a n d o t h e r s by G e r m a n or Italian i m m i g r a n t s . Variable inflation rates and unpredictable government policies made it difficult for firms to make rational plans; they often had to rely on impulsive, seat-of-the-pants decisionmaking. Much also d e p e n d e d on personal contacts within the government. Cardoso did not find an ideological split between agricultural and industrial interests. Most businesspeople t h o u g h t the two could develop in t a n d e m . In this regard the Communist Party activists had been misled by their outdated textbook Marxism. The data "did not coincide with the ideological r e f e r e n c e points," and Cardoso concluded that national-bourgeois revolution was not viable and that Brazil was marching toward a "subcapitalist" role in the world capitalist system. 47 Many Brazilian leftist activists and scholars who wrote about the industrial bourgeoisie had little contact with members of that social class. Cardoso's anthropological training and personal inclinations told him he should get to know the people he was writing about to learn their thinking firsthand. This seems like c o m m o n sense, b u t many academics spend most of their time in the library or talking to

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other academics and have little contact with members of the groups they write about. Sometimes their conclusions are influenced more by the ideas of European scholars than by discussions with businesspeople in Brazil. Cardoso's conversations with businesspeople led him to conclude that the Brazilian business class had not existed long enough to build up a tradition of class consciousness and social responsibility. Few had an interest in civic leadership; they devoted themselves primarily to their businesses and their families. In part, this situation existed because the working class was not well enough organized to confront businesspeople and force them to respond collectively. Ideologically, businesspeople had a range of opinions, many of which were out of touch with the reality of their situation. Many, for example, opposed government intervention in the economy even though their own business success depended directly on government initiatives. They complained about favoritism yet put much energy into seeking favors. Many were allied with foreign capital and had no animosity toward international corporations; indeed, they often needed foreign capital and technology to advance their businesses. In the 1990s Cardoso acted on this analysis by uniting proponents of democratic reform within a capitalist framework under his own leadership. In the early 1960s, however, he felt no political force was capable of doing this. He did not believe a socialist revolution was possible, viewing it as a "mirage which always appears as a hope and a threat, between the poles of which popular leaders and industrial leaders constantly vacillate." 48 His research suggested that industrial leaders were n o t p r e p a r e d to lead a nationalist developmental process independent of international capitalism. In his work in the 1960s, Cardoso observed that much industrial progress in Brazil had resulted from the involvement of international businesses in local production. Foreign investment did not necessarily impede, and in many cases had actually helped, Brazilian development. But state industries had also helped. Businesspeople were divided and uncertain, not knowing which policy they should support. They did not want a revolution, but they also did not want a conservative, do-nothing government. Thus Brazilian politics wavered between reformism and immobilism, with a continual threat of popular disorders or a military coup d'état. These pressures were too much for many Brazilian politicians, including President Jánio Quadros who abruptly abdicated his office in August 1961. He was succeeded by his leftist vice president, J o á o Goulart, who threatened more radical reforms, thereby frightening the business classes. Under this threat, Cardoso observed, the industrial leaders of the 1960s

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33

Opted for "order," that is, they gave up once and for all their efforts to maintain hegemony over society. They were satisfied with the condition o f j u n i o r - p a r t n e r f o r western capitalism and the advance guard o f an agricultural sector which was developing very slowly. It remains to be seen what will be the reaction o f the urban masses and the popular groups and whether they will have the organizational and decision-making capability to carry forth the process o f political modernization and e c o n o m i c development. Ultimately the question will be, subcapitalism or socialism? 4 9 A l t h o u g h h e e n d e d Industrial Development

Entrepreneurship

and

Economic

in Brazil with this r e f e r e n c e t o socialism, at n o p o i n t d i d

C a r d o s o e x p l a i n w h a t h e m e a n t by t h e t e r m — w h i c h c o u l d m e a n anyt h i n g f r o m a W e s t e r n E u r o p e a n social d e m o c r a c y t o Cuban-style c o m munism. C a r d o s o c o n c l u d e d that the industrial bourgeoisie could n o t l e a d t h e c o u n t r y f o r w a r d , b u t h e h a d little faith t h a t t h e loosely o r g a n i z e d leftist a n d p o p u l i s t f o r c e s c o u l d take its p l a c e . By t h e t i m e t h e b o o k was p r i n t e d , r e a d e r s k n e w t h a t t h e o u t c o m e was a r i g h t wing, U . S . - s u p p o r t e d military c o u p d ' é t a t . F a r f r o m b e i n g s u p e r s e d e d by this e v e n t , C a r d o s o ' s b o o k h e l p e d to e x p l a i n why it h a d h a p p e n e d .

NOTES

1. Chaer, " O Plano FHC," p. 44. 2. Leoni, Fernando Henrique Cardoso, p. 35. 3. See the entry on Leónidas Cardoso in Dicionario Historico-Biografico Brasileiro, 1930-1983, Volume I (Rio de J a n e i r o : Forense-Universitaria, 1 9 8 4 ) , pp. 6 2 7 - 6 2 8 . 4. Leoni, Fernando Henrique Cardoso, p. 45. 5. O Presidente Segundo o Sociólogo, interviews with Roberto P o m p e u de Toledo, 1998, p. 342. 6. "Interview with J o s é Carlos Cafundó and Luiz Fernando Emediato," O Estado de Sao Paulo, 1985. 7. Cardoso, 1980, As Idéias e Seu Lugar, p. 117. 8. "Memorias da María Antonia," 1988, p. 27. 9. Kahl, Modernization, Exploitation and Dependency, p. 130. 10. Cardoso, 1980, Ai Idéias e Seu Lugar, p. 38. 11. "Interview with Mino Carta," 1994, p. 12. 12. "Prestes Dirige-se ao Povo," Fundamentos, January 1951. 13. Interview with author, S e p t e m b e r 9, 1997. 14. "Interview with Mino Carta," 1994, p. 22. 15. Cardoso, 1952, " U m Falso Retrato do Brasil." 16. Monica de S. Gouvèa Franga Pereira, Anhembi: Criagáo e Perfil de urna Revista de Cultura (Sáo Paulo: Instituto de Estudos E c o n ó m i c o s , Sociais e Políticos de Sáo Paulo, 1 9 8 7 ) , pp. 3 7 - 3 8 . 17. Cardoso, 1973, "Cuba: Lesson or Symbol?" p. 1. 18. "Interview with Lourengo Dantas Mota," 1983. 19. " U m ex-Aluno," 1992, p. 38.

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Fernando Henrique

Cardoso

20. Arantes, Urn Departamento Francés de Ultramar. 21. Claude Lévi-Strauss, Tristes Tropiques, Trans. John Russell (New York: Atheneum, 1971), p. 107. 22. Quoted in Kahl, Modernization, Exploitation and Dependency, p. 130. 23. From Charles Wagley, "Forward to Florestan Fernandes," The Negro in Brazilian Society (New York: Columbia University Press, 1969). 24. Cardoso, 1980, Ai Idéias e Seu Lugar, pp. 38-39. 25. O Presidente Segundo o Sociólogo, 1998, p. 343. 26. "Interview with Lourengo Dantas Mota," 1983, p. 7. 27. Florestan Fernandes, Fundamentos Empíricos da Explicando Sociológica (Sao Paulo: Companhia Editora Nacional, 1967), p. xii. 28. This account is Cardoso's, from "Memorias da Maria Antonia," 1988, pp. 27-34. 29. Simone de Beauvoir, Hard Times: Force of Circumstance II (New York: Paragon House, 1992), p. 262. 30. "Memorias da Maria Antonia," 1988, pp. 29-30. 31. Quoted in Leoni, Fernando Henrique Cardoso, p. 58. 32. Diario do Congresso Nacional (Segào II), July 1, 1988, p. 1970. 33. Schwarz, "Um Seminàrio de Marx." 34. "Interview with Lourengo Dantas Mota," 1983, pp. 10-11. 35. Schwarz, "Um Seminàrio de Marx," p. 6. 36. Sader, "Duas Invasòes," from "Memorias da Maria Antonia," 1988, p. 161. 37. "Interview with Lourengo Dantas Mota," 1983, p. 15. 38. Quotes from Mota from Monica Dallari, "O primeiro palanque foi na faculdade," Jornal do Brasil, October 7, 1994, p. 7 of special biographical section on Cordoso. 39. Quotes from Ianni from Ibid. 40. Cardoso, 1962, Capitalismo e Escravidào no Brasil Meridional, p. 270. 41. "Interview with Lourengo Dantas Mota," 1983, p. 11. 42. Cardoso, 1964, Empresario Industrial e Desenvolvimento Econòmico no Brasil, p. 44. 43. Ibid., p. 67. 44. Ibid. In Cardoso's words: "The 'variables' do not combine in a vacuum to determine a type of structure: they have different specific weights, some of them assuming a determining role, others secondary roles, and the structural configuration is defined by the pattern of relationships which the variables maintain between themselves. For this reason, it is necessary for the analysis to distinguish the determinations which are essential to construct the structure of society" (p. 67). 45. For an overview of this crisis in English, see Youssef Cohen, Radicals, Reformers and Reactionaries: The Prisoner's Dilemma and the Collapse of Democracy in Latin America (Chicago: University of Chicago Press, 1994). For a more detailed treatment, see Wanderley Guilherme dos Santos, Sessenta e Quatro: Anatomia da Crise (Sào Paulo: Edigòes Vertice, 1986). In English, Wanderley Guilherme dos Santos, "The Calculus of Conflict: Impasse in Brazilian Politics and the Crisis of 1964," Ph.D. diss., Stanford University, 1979. 46. "Interview with Lourengo Dantas Mota," 1983, p. 11. 47. Cardoso, 1980, Ai Idéias e Seu Lugar, p. 87. 48. Cardoso 1964, Empresário Industrial e Desenvolvimento Econòmico no Brasil, p. 85. 49. Ibid., pp. 186-187.

Chapter 2

Exile, 1 9 6 4 - 1 9 6 8

T H E 1 9 6 4 COUP D'ÉTAT WAS NOT REALLY A SURPRISE. POLITICAL TENSION

had been rising in the country since August 1961 when President Jânio Quadros resigned abruptly in frustration over conflicts with the Congress. J o â o Goulart, the vice president who succeeded him, was an erratic left-of-center politician who had been chosen to balance the ticket. The conservatives and the military were reluctant to allow Goulart to take power because he was allied with groups that advocated massive land reforms and socialist economic measures. An attempt was made to amend the constitution to create a parliamentary form o f g o v e r n m e n t , which would lessen G o u l a r t ' s power. B u t in a plebiscite the people failed to ratify this change. Some leftists saw the Goulart presidency as a chance for leftist revolutionary change, which worried middle-class housewives and businesspeople who clamored for military intervention. Traditionally, the Brazilian military has claimed a role as the guardian of social order, stepping in when civilian leaders reach an impasse or the masses get out of hand. Cardoso was interviewing businesspeople for his postdoctoral research during these years, and he had connections with the military through his father; thus he knew a coup was being discussed and plans were being made, although he knew no specifics. At the time, he was a university professor with no direct involvement in politics. His closest connection to the Goulart administration was through Darcy Ribeiro, head of the Casa Civil, which dealt with administrative matters. Ribeiro was an anthropologist, and Cardoso knew him through anthropological circles since his wife, Ruth, and his sister's husband, Roberto Cardoso de Oliveira, were anthropologists. On March 13, 1964, when the military was holding its final meeting to proclaim the coup, Cardoso took the train from Rio de Janeiro to Sâo Paulo. On the drive to the train station, he could see that almost every house in Copacabana had a candle burning in the window; an

35

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exception was his father's house. The candles symbolized support for a military coup. Cardoso's feelings were mixed. He strongly opposed a military coup, as did his father, but he thought Goulart was making irresponsible promises and stirring up expectations he could not satisfy. On the train ride to Sào Paulo he d i s c u s s e d these matters with three friends—Plinio de Arruda Sampaio, José Gregori, and Marco Antonio Mastrobuono. They were afraid Goulart would attempt a preemptive coup and that the results would be disastrous. As it happened, the coup came from the military side and was over quickly. At first, rumors spread that the military units in the southernmost state of Rio Grande do Sul were resisting. Cardoso and a few friends decided to take up arms and join the democratic forces. They got into a j e e p and headed for the Sào Paulo airport, but the streets were blockaded and they could not get through. They had no military training or experience with firearms and could have easily been killed, so it is fortunate that the rumors of resistance in the south were false. Failing to reach the airport, the group drove to the university building on Rua Maria Antonia to see what was happening. The streets were blocked by students, who told Cardoso he could not get through and that the military had been looking for him. In fact, the military had picked up his friend Bento Prado briefly, thinking Bento was Fernando Henrique.

GOING INTO EXILE

Cardoso had been active in the University Council where he had conflicted bitterly with academic conservatives. He viewed this as an academic matter that should have nothing to do with national politics, but his opponents viewed the coup as a chance to get rid of the radical faction. Cardoso moved to the home of a friend and colleague, Célia Galvào, who lived near him in the Brooklin neighborhood of Sào Paulo. For a few days Cardoso moved around, staying with friends in different parts of the city. It seemed the security police really were looking for him; when his wife called the police to ask about him, they confirmed that they wanted to bring him in because they saw him as a political man and not just an academic. Through friends, Cardoso learned that the police did not have his name on a list at the airport of people who were to be detained if they tried to leave the country. With the help of a friend, Mauricio Segali, who later became the leader of the Workers' Party, Cardoso managed to get on a flight to Buenos Aires.

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Despite the coup, Cardoso's mind was on continuing his academic career in Sào Paulo. He remembers that "in the days immediately following the coup, in Célia's house, I tried to write my thesis for a chair at the University. This was crazy: they were trying to arrest me and I was writing my thesis."1 His trip to Buenos Aires was convenient f o r his thesis research since his project was part of a comparative study of business leaders in Argentina, Brazil, Chile, and Mexico. H e went to the Sociology Department at the University of Buenos Aires to speak to friends who were eager to offer him a job. H e ran into a Brazilian friend, Nuno Fidelino Figueirado, who had been an assistant in the Faculty of Economics at the University of Sào Paulo but was now at the Economic Commission for Latin America (CEPAL) in Santiago, Chile. Cardoso told him that he had been in touch with the distinguished Spanish sociologist José Medina Echeverria, for whom he had written an article on businesspeople. Medina Echeverria was then at CEPAL, and he liked Cardoso's approach because it was more Weberian and less Marxist than that of most of the social scientists at CEPAL. H e had o f f e r e d Fernando Henrique a j o b previously, but Cardoso persuaded him to offer the j o b to a former student, Francisco Weffort. Weffort accepted and was en route to Santiago himself. Now that Sào Paulo was closed off, at least temporarily, CEPAL found the funds to offer Cardoso a temporary position, and he flew there on May 1, 1964, arriving only a few weeks after Weffort. Despite his concerns about events in Brazil, Cardoso had a wonderful time in Santiago. The pay and working conditions were excellent, as he admitted in his often quoted allusion to the "bitter caviar" of exile. He worked closely with leading social scientists from Chile, Argentina, Bolivia, Venezuela, Mexico, and other countries, and he began to think about the problems of Latin America as a region. Cardoso's temporary visiting appointment was extended indefinitely, and he could have had a permanent career there if he had chosen to do so. Cardoso did not have to live without the companionship of his family; Ruth and their three children j o i n e d him. T h e children enrolled in local private schools, and they had a comfortable home in the middle-class neighborhood of Vitacura, where most employees of international organizations lived. CEPAL was a U N agency, which allowed Cardoso to purchase a tax-free Mercedes Benz 350S—a valuable status symbol in protectionist Latin America where only diplomats and wealthy people owned imported cars. Many other Brazilian exiles lived in the neighborhood, and they gathered almost every week for the traditional Brazilian black bean stew, feijoada. Ironically, like most Brazilians, they rarely ate feijoada when they were in Brazil.

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For an American parallel, it was like having a full Thanksgiving dinner every week, with plenty of Chilean wine and caviar.

DEPENDENCY AND DEVELOPMENT

Cardoso's most influential book, Dependency and Development in Latin America, was written in Santiago between 1965 and early 1967. Cardoso wrote in Spanish, which he was just mastering. His coauthor, Enzo Faletto, a young Chilean social scientist who had just completed a monograph on the incorporation of the working class into the development process, revised Cardoso's text and added his own ideas. Medina Echeverria read it closely and offered suggestions. Raul Prebish, the distinguished economist who headed CEPAL, read early drafts and approved them for circulation, although he had reservations about the work. Dependency and Development was published in Spanish in 1969, in Portuguese in 1970, in Italian in 1971, in German in 1977, in French in 1978, and in English in 1979. By the time it appeared in English it had been through sixteen printings in Spanish and was, in the words of an Argentine political scientist in 1982, "without any doubt. . . the analysis of Latin American political and social processes that has had the largest impact in academic and intellectual circles in the Latin American region of any work in the last fifteen years" (p. 160). 2 The book's international fame greatly strengthened Cardoso's position when he returned to Brazilian academic and political life. Rereading the book today, it is not readily obvious why it was so important. It is a tentative, exploratory work that makes many interesting points but does not document them fully. The authors describe it, appropriately, as an "essay." As with many of Cardoso's works, much of its importance resulted from its timing. It appeared at a time when Latin American social scientists were rethinking ideas that had not worked as they had anticipated. They had been expecting increasing economic crises and the growth of the left, but the economic crises were waning, and in many countries the right was triumphing. The social scientists needed to know what had gone wrong with their thinking, and Dependency and Development helped them think through the answers. A common mistake social scientists make is to assume that problems that are acute at one point in time are caused by fundamental defects in the structure of society, such as class or racial inequality. This is an understandable professional bias; social scientists are trained in structural theories and tend to see society in those terms. They know reforms are desirable, and they understandably use

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"crises" as an opportunity to advocate for them. In truth, however, many problems are caused by policy errors, economic fluctuations, or simply random events. In time, these problems are resolved in one way or a n o t h e r without the m o r e f u n d a m e n t a l problems b e i n g solved. This is what happened in the early 1960s. Much of Latin America was in a period of slowing economic growth. Many theorists, both Marxist and non-Marxist, assumed this economic downturn had deep roots in the c o u n t r i e s ' e c o n o m i c structures. T h e m a j o r Latin American countries had industrialized through a process known as import substitution. Tariff barriers were used to cut off imports, and protected local industries were built to manufacture the same products. This process had a limit, however, because the markets were small and the protected industries were inefficient and produced high-priced goods. They were supposed to become more efficient and competitive with time, enabling them to reach larger markets, but it was not clear whether they could do so. Many leftists thought dependent capitalism had reached a crisis because of the completion of import substitution or other factors and that the only solution was to replace it with a socialist economy. Moderate reformers thought economic development could continue but only if income was redistributed to give the impoverished masses more purchasing power. Conservatives thought the economic impasse was caused by inflation, high interest rates, and excessive government intervention in the economy, and they advocated giving free reign to the "invisible hand" of the free market. Advocates of these ideological positions did not consider a simpler alternative: Perhaps the economy was simply in a cyclical downturn, a normal variation in a long-term process of uneven economic growth. 3 Perhaps the "crisis" would soon pass and growth would resume, even without fundamental changes in society (however desirable they might be on other grounds). Cardoso suspected this might be the case, in large part because he had spent so much time studying Marx's classical analyses of cyclical patterns in nineteenth-century Europe. He was no expert on econometrics, but he knew that cycles were to be expected and that downturns were likely to be followed by upturns. He was not sure, however, that Latin American countries could simply wait for capitalist development to proceed as it had in Europe and North America; perhaps structural reform would be necessary. In Santiago Cardoso had many discussions with Trotskyist writers André Gunder Frank and Rui Mauro Marini, who disagreed with the traditional Marxist theory that Latin American and o t h e r Third World societies would repeat the stages of development European societies had followed. Traditional Marxist theorists assumed Latin

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American societies were "feudal" and that they needed to have a "capitalist" revolution led by their own "bourgeoisies" (urban business elites) b e f o r e they could go on to "socialism." G u n d e r Frank and Mauro Marini insisted that Latin America was not feudal but was an oppressed region o f a worldwide capitalist imperialist system. They thought the failure to develop was caused by exploitation by wealthy countries and that the only hope was to break with capitalism altogether. 4 T h e crisis o f capitalism theories were undermined not so much by theoretical argument as by the course of history. T h e p h e n o m e n o n that most dramatically refuted the theories was the success o f the Asian "tigers," countries such as South Korea and Taiwan. In the 1970s these countries developed very rapidly by accepting foreign i n v e s t m e n t a n d e x p o r t i n g p r o d u c t s to d e v e l o p e d n a t i o n s . T h e y showed that very rapid economic development was possible within the multinational capitalist system. By contrast, the economic problems of North Korea, Cuba, and East Germany made socialist revolution a much less attractive alternative. By the end of the 1970s, history had shown that rapid capitalist development was also possible in Latin America, despite its social problems. Brazil in particular came out o f the slump o f the early 1960s and entered a period of very rapid economic growth without breaking with international markets, redistributing wealth, or solving its inflation problems. But when Cardoso and Faletto wrote Dependency and Development, Latin American social scientists were just beginning to grapple with these emerging developments. As Joseph Kahl observed in his review of Cardoso's sociology, "Cardoso offered an alternative j u s t when abstract and formal theories were losing their luster because they did not seem to offer adequate explanations for Latin American conditions." 5 T h e alternative Cardoso and Faletto offered was not a new general theory; instead, they urged social scientists to focus on historical and contemporary realities rather than on proving abstract models. T h e y did n o t reject the models altogether, but they i n c o r p o r a t e d ideas from them to the extent that they helped in the empirical analysis. This was a change from the more formal and doctrinally correct Marxism o f some o f their colleagues, but it was a subtle change that was easy for social scientists steeped in Marxism to accept. In the preface to the English-language edition o f Dependency and Development written in 1976, Cardoso and Faletto explicitly discuss their theoretical differences with doctrinaire Marxism. They explain that they oppose " m e c h a n i s t i c c o n c e p t i o n s o f history [in which] Latin American countries are perceived as having always been deter-

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mined by the 'capitalist system,' as it has developed on a global scale." Cardoso and Faletto argue that Marxists are just as guilty of imposing rigid schemes on reality as the bourgeois theorists the Marxists criticize. According to these Marxists, "Imperialism turns into an active and metaphysical principle which traces out the paths of history on the sensitive but passive skin of dependent countries." 6 Cardoso and Faletto insist that it is simply not true that the fate of Latin American countries is rigidly determined by social forces that are out of their control. There are social constraints that limit choices, but there are many alternative policies Latin American leaders can follow. A good social analysis, in their view, "follows real historical process very closely and depends to some extent on its own ability to show socio-political actors the possible solutions to contradictory situations." 7 To really understand what happens in developing societies it is necessary to deal with "the structure of the national production system and the kind of linkage it has developed with the external market; the historical-structural shape of such societies, with their ways of assigning and maintaining power; and above all, the political-social movements and processes that exert pressures toward change, and their respective orientations and objectives." 8 Cardoso and Faletto approached the problem with a comparative discussion of the history of key Latin American countries, including Brazil, Argentina, Mexico, Peru, Bolivia, Colombia, Venezuela, Chile, Uruguay, Guatemala, and Cuba. This is an enormous topic that could not be dealt with comprehensively in a 220-page book. Cardoso and Faletto focused their attention on the political management of economic activities, particularly the question of "how successful local social classes have been in participating in the production process and in setting up institutional controls to ensure that participation." 9 In some cases, such as Peru and Chile, Cardoso and Faletto found that local elites failed to consolidate power and thus lost control to foreign interests. But in other countries, such as Argentina and Brazil, local elites retained much greater national autonomy. In the early twentieth century Latin American countries began incorporating the middle classes into the political process. These classes grew as the economies diversified, but the pattern was different from country to country. In Brazil there were regional divisions within the oligarchy. Progressive military officers and civilian public servants formed alliances with sugar cane growers from the northeast and cattlemen from the south against the dominant Sao Paulo coffee interests. Cardoso knew this history well from his family's involvement. Cardoso and Faletto describe how industrialization came to Latin

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America in the mid-twentieth century through a variety of political arrangements. Some countries, such as Argentina, had a vital private sector based on the agro-exporting economy. These private interests formed an alliance with the Peronist political forces, thus co-opting their mass support. In Brazil the private sector was weaker, so the state took much more initiative, particularly during Getulio Vargas's presidential terms. In Mexico too, industrialization was begun by the state, which overcame its revolutionary rhetoric to form agreements with foreign investors. Cardoso and Faletto make the generalization that private initiative was more successful in countries in which the export sector was controlled by national groups. If the export economy was limited to enclaves with strong foreign participation, state initiative was needed to start the industrialization process. The fundam e n t a l point, however, was that Latin American leaders were n o t passive victims of global social forces; they could take decisions that would shape their countries' destiny. T h e leaders often made what Cardoso and Faletto thought were the wrong choices, opting for a kind of development that built up a n e w kind of oligarchy, which m a n i p u l a t e d the state for its own benefit a n d to advance its s c h e m e o f d e v e l o p m e n t in association with f o r e i g n capital. T h u s what could have been a m o d e r n i z e d social a n d political d e v e l o p m e n t c a m e to the d e a d e n d o f the present state o f capitalist d e v e l o p m e n t in Latin America: m o d e r n i z a t i o n at the cost o f g r o w i n g a u t h o r i t a r i a n i s m a n d c o n t i n u i n g p o v e r t y typical o f "development with marginal population." 1 0

The key point is that it could have been different. The leaders were not forced to impose authoritarian political systems and keep living standards artificially constricted; they could have used the state to maintain or even increase wage levels. To be sure, this can be politically risky since it raises expectations that can be dashed when export prices fall or inflation gets out of hand. At this point leaders may be forced to make the difficult choice between opening the market to foreign capital or making a radical move toward socialism. Perhaps the most critical and controversial point argued in the book is that crisis in Latin America was fundamentally political rather than economic. Cardoso and Faletto recognize that structural problems exist, but they emphasize that "whether the structural barriers to d e v e l o p m e n t r e m a i n or are overcome will be d e t e r m i n e d by how these economic conditions are used in the power game rather than by the particular economic conditions themselves . . . the course of history depends largely on the daring of those who propose to act in terms of historically viable goals." 11

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Cardoso and Faletto called for daring, innovative, democratic leadership, but they were surprisingly vague about what that leadership should do. They ended the book with a vague and abstract expression of hope that people would find a way to work things out democratically. The effective battle is not between corporativism and the democratic tradition. It is between technocratic elitism and a vision of the formative process of a mass industrial society which can offer what is popular as specifically national and which succeeds in transforming the demand for a more developed economy and for a democratic society into a state that expresses the vitality of truly popular forces, capable of seeking socialist forms for the social organization of the future. 12

This reference to socialism was added, almost as an afterthought, in the 1979 postscriptum. Cardoso and Faletto did not explain what "socialist forms of social organization" might turn out to be. The original 1969 edition ended with an even vaguer appeal, calling for "collective action guided by political wills that make work what is structurally barely possible." 13 At this point in his thinking, Cardoso knew he wanted a democratic government based on active participation by popular forces. He did not know how to get such a government into power; nor was he ready to outline the policies he thought such a government should follow if it were elected. His lack of certainty was shared by many Latin American intellectuals at the time because the problems were difficult and there was no way to be certain how democracy and human betterment could be achieved. It was a time for rethinking and reevaluating, and Cardoso and Faletto's book was a major contribution to that process. The social scientists at CEPAL were fairly receptive to Cardoso's analyses, even when he criticized their previously expressed views. Cardoso was friendly and listened attentively to others' points of view, and he often incorporated their ideas in his work. He and Faletto were generally thought of as among the founders of dependency theory, but they did not think of dependency as a new theory that was in conflict with Marxism, neoclassical economics, or any other doctrine. This made it easy for Cardoso to stay on good terms with everyone, and he advanced rapidly within the Santiago bureaucracy and was p r o m o t e d to a d j u n c t director of CEPAL in 1967. Many people thought of him as the logical successor to Raúl Prebish when Prebish retired, and indeed Cardoso might eventually have accepted such a post if the Chilean military coup in 1973 had not destroyed the intellectual and political climate in Santiago.

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Cardoso

MOVING TO FRANCE

Looking back, Cardoso observed that the Brazilian military did him an "enormous" personal favor when it seized power in 1964. 1 4 The coup d'état broke him out of the academic routine of the University of Sâo Paulo and placed him in an international policy environment where his talents were used to the best advantage. He achieved international visibility, which greatly e n h a n c e d his c a r e e r prospects. Cardoso did not stay in Santiago long. In 1967 he accepted an invitation f r o m his f o r m e r professor Alain T o u r a i n e to c o m e to the Industrial Sociology Laboratory at the University of Paris. Friends advised him to stay in Santiago where he had a promising future, but the lure of France was too strong. Cardoso accepted an appointment as professor of theoretical sociology at the University of Paris campus at Nanterre. When he arrived in France, Cardoso j o i n e d a group of distinguished Brazilian social scientists, including Luciano Martins, Waldir Pires, and Celso Furtado—all o f whom had teaching or research appointments in France. O t h e r Brazilians passing through Paris joined the group from time to time, and one of them asked Furtado, "and here in France, what is going to happen?" Furtado answered, "Nothing is going to happen here." 1 5 Cardoso and the others agreed. As far as they could see conditions were stable, the government was popular, and no fundamental problems existed that should cause a social upheaval. Certainly, the Nanterre campus did not look like a revolutionary hotbed. Nanterre is a suburban area, far from the historical parts of Paris, and the campus is centered on a row of modern buildings. It serves students from surrounding middle-class suburbs. Despite the surroundings, however, the atmosphere on campus was intensely revolutionary. The buildings were connected by a long hallway that was decorated with political slogans and murals and was lined with tables staffed by political activists selling tracts and recruiting students and professors. Cardoso found Trotskyists, Maoists, Stalinists, libertarian anarchists, and all kinds of leftist groups—all of which were also present in Brazil. The focus of the students' attention, however, was not on the issues of imperialism, militarism, poverty, and exploitation that concerned Brazilian students at the time. Rather, the students were concerned with abstract and philosophical questions of personal and social liberation. From Cardoso's "Latin American viewpoint, the questions seemed similar to the discussions about the sex of angels. In fact, they didn't deal with angels. They discussed the right of the boys to visit the girls in their dormitory rooms. The girls already had the right to visit the boys in their rooms." 1 6

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The students called themselves Marxists, but they had read little Marx. Few had even read U.S. Marxist philosopher Herbert Marcuse, one of their gurus, because his works had not yet been published in French. Cardoso's lectures on Marx, Weber, and Marcuse were well received. The faculty at Nanterre was rather distinguished. In addition to Touraine, Cardoso's colleagues included Michel Crozier, a leading theorist of bureaucracy, and Henri Lefebvre, a prominent Marxist sociologist whose book on dialectical materialism was an influential text at the time. Crozier and Lefebvre later wrote books about the 1968 student-worker uprising in Paris, widely viewed at the time as a precursor of revolutionary uprisings in advanced capitalist societies. One of Cardoso's students was Daniel Cohn-Bendit, a German who became the most p r o m i n e n t leader of the 1968 uprising. CohnBendit discussed the possibility of Cardoso becoming active in French politics, but Cardoso wanted to keep his focus on Brazil. Cardoso enjoyed the events of 1968, finding them A collective catharsis, with festive gunfire and armored clashes on the street, with broken legs and intense political discussion. It was an opportunity to taste the flavor of great moments of social transformation. And I learned practical sociological lessons: "apathetic" societies can become quickly mobilized and they can change; social change, even "revolutionary" change, is not predictable. It depends on the fusion of multiple contradictions and aspirations, located in different social planes and moved by previously unencountered values. But, at the final moment, if there is no political force with an organized will to guide the change, in keeping with the popular pressures, the impasse will reappear. 1 ?

RETURN TO THE UNIVERSITY OF SÂO PAULO

Conditions in Brazil seemed to be liberalizing. Cardoso had never been formally exiled from the country, and he had returned briefly for his father's funeral without interference from authorities. In 1967 the S u p r e m e Military T r i b u n a l , u n d e r the liberal j u d g e Peri Bevilacqua, issued a writ of habeus corpus that canceled the legal process against Cardoso. He was free to r e t u r n at will, and the prospect of a tenured professorship at the University of Sâo Paulo was tempting. Cardoso returned to Brazil in 1968 with the immediate goal of obtaining a full professorship at the University of Sâo Paulo. This was difficult because the university still followed the French model of university administration in which a limited n u m b e r of professorial chairs were available in each discipline. A full professorship was avail-

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Cardoso

able only when a chair became vacant because the professor who held it retired or died. As it happened, a position became available with the death of Lourival Gomes Machado, the occupant of a Chair in Political Science at the University of Sao Paulo. Under the system at the time, when a chair became vacant it was filled through an open competition in which applicants submitted samples of their written work. Cardoso was a leading candidate because of his outstanding publication record, especially Dependency and Development in Latin America. Following the formal requirements, he quickly prepared a thesis to submit to the committee evaluating candidates. In Brazil at the time the contest for a chair was a public event, with each candidate defending his or her thesis before the dist i n g u i s h e d p a n e l of j u d g e s in a r o o m p a c k e d with i n t e r e s t e d observers. Cardoso's thesis, later published as a book entitled Politics and Development in Dependent Societies, showed he had mastered mainstream theories and methods in political science. The book begins with a review and critique of theorists such as Max Weber, Karl Mannheim, Talcott Parsons, Gabriel Almond, Sidney Verba, and Robert Lane—established, mainstream scholars in no way affiliated with the Marxist tradition. Based on this literature, Cardoso develops the concept of ideology, which is complex because "ideology is not the immediate transcription of the conditions of social existence, nor is it the reign of pure illusion; it cannot be dismissed as 'false consciousness,' as an idol, nor can it be accepted as a substantive expression of a mode of social relationship. It presupposes, as Althusser has written, a real relationship, a lived relationship and an imaginary relationship." 18 Clearly, Cardoso had not lost his knack for academic prolixity when the occasion demanded it. Perhaps more original than Cardoso's theoretical review is his comparison of two ideological movements, Peronism in Argentina and the Brazilian movement led by Getulio Vargas. He argues that in Argentina the middle and working classes were more developed and were linked more strongly to the export economy, which is why they developed more independence as a social force. In Brazil the movements were orchestrated more by the elite because the mobilization of class forces was less advanced. Thus the ideological differences reflected differences in class mobilization that, in turn, reflected the different economic histories of the two countries. In addition to the theoretical and historical analyses, Cardoso's thesis included some statistical analysis of his interview data. He constructed attitude scales and some measures of the extent to which the respondents' businesses were linked to foreign interests. He was able to show some relationship between social characteristics, such as the

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size of the business and amount of foreign involvement, and the inclination to form political alliances. Using these statistical techniques, Cardoso divided respondents into "national-populist" and "internationalizing" groups, although he concluded that neither sector's ideology expressed the "vocation for dominance" that would characterize an ascending class that was building a nation. 19 Cardoso was neither particularly enthusiastic about statistical studies of attitudes nor especially skilled at such analysis. His samples were small and not representative of any population, and he used no tests of statistical significance. One can easily see that many of the differences are not statistically significant. Cardoso was aware of the limitations of his data and stated that in his work "quantitative analytical techniques and quotations from individuals are used as 'interpretative clues,' not for purposes of drawing statistical inferences." 20 In a later interview Cardoso explained the nature of his approach to intellectual work: What I try to do is to illuminate with certain intellectual categories a particular historical situation. And I try to keep up with the newest techniques—I've done some game theory with the computer—but the available techniques are still weak. They are based on empirical generalizations, attempting to capture the constancies, the regularities of a situation, emphasizing the most stable aspects. One can in a given investigation develop instruments for detecting the current tensions and conflicts, the values of the actors. But there is no methodology for understanding the forces that are emerging, and yet change is always my main preoccupation, what in [the] HegelianMarxist dialectic would be called the negation of the situation. . . . It only makes sense if you can combine theory, research, the historical moment, and practice—but it is hard to play that game, to move among the levels, and it takes flexibility, both intellectual and emotional. 21

Cardoso was a master of precisely that kind of interpretative essay—combining theory, research, historical knowledge, and insights gained from practical involvement. His writings were always relevant to the cutting issues of the time. For that reason, the students at the University of Sao Paulo were eager to have him return to the faculty; at the same time, many were opposed in principle to the system by which chairs were filled by competitions between applicants from both outside and inside the university. They believed the university should adopt a departmental system in which professors would be promoted from within according to seniority. If this system were to be followed, the current position would go to a female professor who had seniority within the department but whose publication record and intellectual charisma did not rival Cardoso's. This situation creat-

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ed a conflict for Fernando Henrique, since he agreed with the principle of reforming the university by instituting a departmental system. At a public meeting a student asked him to step down from the competition for the chair in support o f this principled position. He refused, promising to work for university reform from within once he had the position. Cardoso won the chair by a unanimous vote of the committee, which made it impossible for the administration to refuse to offer him the appointment. Although the government seemed to be liberalizing in 1968, the students were becoming increasingly militant. There were massive demonstrations against the dictatorship, and small groups of students were joining guerrilla movements in an effort to overthrow the dictatorship. The students were inspired by the Cuban revolution and by the writings of French radical philosopher Regis Debray, who thought small "focos" of armed rebels could topple governments throughout Latin America. Cardoso remembers that he was completely out of touch with these developments: " S o m e [students] were already involved in armed struggle and I knew nothing about these things—it was as if I were arriving from the moon. I was a dinosaur." 22 Cardoso was also a superstar academic who had played an important role in university politics before the 1964 coup d'état. He was immediately elected director of his department, and he became heavily involved in university reform. The students were highly radicalized, especially those within the Faculty of Philosophy, Sciences, and Letters. Cardoso recalls that they played the Communist anthem, "International," all day long in the halls of the faculty building. This activism was greatly resented by conservative senior faculty, especially those in the Law School, as well as by the military government. The government cracked down on the student movement with a series of Institutional Acts that eliminated the political rights of prominent political leaders and ended the civil liberties protections that had survived the 1964 coup. A campaign of torture was used to break the clandestine revolutionary organizations. This was an overreaction by the military since the revolutionary movement never posed a credible threat, but it provided enough of a pretext to allow the hard-line factions in the military to prevail over those who favored a gradual liberalization. The conservative professors at the university persuaded the government to extend its crackdown to include prominent leftist university professors. Rather than arrested or tortured, a number of prominent professors were "retired" from the university and were forbidden to teach at any university in Brazil. The compulsory retirements were done in a very Brazilian way that honored the professors' esteemed role in Brazilian society and respected their rights as employees of a

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state institution. They received retirement pay, which nearly equaled the pay they would have received if they had been working even though they had no work obligations and in fact were not allowed to seek work in their profession. Further, they were allowed to continue living in the country with their families. Cardoso heard on the car radio that he was on the list of professors suffering "compulsory retirement" on his way to the university one day in April 1969. When he arrived at the university he heard that the authorities had come to pick him up, but he evaded them. The students protested, and there were statements of support from colleagues around the world. The University of Nanterre invited him back, and Professor Richard Morse at Yale University asked if he would like to come to New Haven. None of the protests could reverse the authorities' decision, however, and Cardoso was forced o n c e again to indefinitely postpone his plans for a career as a Brazilian university professor. He had already spent five years abroad and did not want to leave the country again.

NOTES

1. "Interview with Mino Carta," 1994, p. 16. 2. Marcello Cavarozzi, "El 'Desarrollismo' y las Relaciones entre Democracia y Capitalismo Dependiente en Dependencia y Desarrollo en América Latina," Latin American Research Review 17 (1982): 152-171. 3. For a brief critique of structuralist socioeconomic theories of Latin American economic development as applied to the cases of Brazil and Chile, see Youssef Cohen, Radicals, Reformers and Reactionaries: The Prisoner's Dilemma and the Collapse of Democracy in Latin America (Chicago: University of Chicago Press, 1994). 4. Rui Mauro Marini, Dialética de la Dependencia (Mexico City: Nueva Era, 1973); André Gunder Frank, Capitalism and Underdevelopment in Latin America (New York: Monthly Review Press, 1967) and Latin America: Underdevelopment and Revolution (New York: Monthly Review Press, 1970). For a critique of these theories see Alejandro Portes and Douglas Kincaid, "Sociology and Development in the 1990s: Critical Challenges and Empirical Trends," Sociological Forum 4 (1989): 479-503 and Gary Greffi, "Rethinking Development Theory: Insights from East Asia and Latin America," Sociological Forum 4 (1989): 505-534. 5. Kahl, Modernization, Exploitation and Dependency, pp. 178, 180. 6. Cardoso and Faletto, 1969, "Preface to the English Edition," Dependency and Development in Latin America, pp. xv-xvi. 7. Ibid., p. xiv. 8. Cardoso and Faletto, 1969, Dependency and Development in Latin America, pp. 15-16. 9. Ibid., p. 29. 10. Ibid., p. 153, emphasis added by author. 11. Ibid., pp. 175-176.

50 12. 13. 14. 15. 16. 1978. 17. 18. 45-46. 19. 20. 21. 180. 22.

Fernando Henritfue Cardoso

Ibid., p. 216. Ibid., p. 176. "Interview with Mino Carta," 1994, p. 18. O Presidente Segundo o Sóciologo, 1998, p. 45. Perspectivas, p. 98; from an interview published in Isto E, May 10, Perspectivas, p. 100. Cardoso, 1971, Política e Desenvolvimento Ibid., p. 203. Ibid., p. 55. Q u o t e d in Kahl, Modernization

ern Sociedades Dependentes,

Exploitation

"Interview with Mino Carta," 1994, p. 17.

and Dependency,

pp.

pp. 178,

Chapter 3

From Professor to Senator, 1969-1982

O N C E AGAIN THE MILITARY REGIME GAVE CARDOSO A BLESSING IN DISGUISE

by rescuing him from the comfortable obscurity of an academic c a r e e r a n d r e u n i t i n g him with several of his most b r i l l i a n t colleagues. 1 The members of the Marxist study group were still close friends, but they had each gone on to independent careers. The "compulsory retirements" in 1969 put a number of them in the same situation at the same time, which led to a joint venture that greatly enhanced their impact on Brazilian society.

BECOMING AN APPLIED SOCIOLOGIST

Cardoso and many of his friends wanted to stay in Brazil and participate in the struggle for democracy and social reform. They wanted to contribute in their professional role as social scientists, but university employment was closed off, as was employment in government planning agencies and other institutions that traditionally hired social scientists. So Cardoso and several of his friends decided to establish and fund their own research institute. This idea was not new. Fernando Henrique had enjoyed the supportive research atmosphere in Chile, and at the time he had discussed the possibility of establishing a similar center in Brazil. In 1968 a series of meetings had taken place at the Faculty of Hygiene in Sao Paulo to form the nucleus for a center. The compulsory retirements gave the project a new urgency and freed a number of the top people to devote their full time to it. The first question was whether such an institute would be tolerated by the military regime. On paper, the compulsory retirement decree prohibited the "retired" professors from doing research as well as from teaching. Cardoso thought, however, that this might be one of those "Brazilian things which don't stick but remain as annoy51

52

Fernando Henricjue Cardoso

ances." 2 The group members decided to go ahead and hope nothing would be done to stop them. They had some informal conversations with well-connected political people including Paulo Martins, who later became governor of the state of Sao Paulo, and decided that they would probably be successful. It is usually difficult to secure funding for a research institute of this sort. Foundations and international agencies are often willing to fund specific research projects, but it is difficult to get support for setting up a new organization. In this case, however, getting funds proved easier than expected. One of the group members' friends, Bolivar Lamounier, had contacts with the local office of the Ford Foundation, and they asked him to see if Ford might be interested. William Carmichael, the director of Ford Foundation operations in Brazil, was enthusiastic about the idea and gave a $100,000 starter grant with no strings attached. The foundation asked for no role in setting priorities or approving projects; it simply took a chance on such an outstanding group of scholars. With this money the Brazilian Center for Analysis and Research (CEBRAP) was formed. Lamounier later joined the research center. Not everyone was happy about a c c e p t i n g Ford F o u n d a t i o n money; many leftist academics thought o f it as selling out to the enemy. For example, Florestan Fernandes never j o i n e d CEBRAP, choosing to teach in Canada rather than remain in Brazil. Otavio Ianni refused to join the first year because of opposition to the Ford funding. Doubts were allayed, however, by the fact that Ford proved willing to fund research that members of CEBRAP really wanted to do without interfering. Many o f these projects were continuations of research members had been conducting at the University o f Sao Paulo before they were fired. The studies were primarily of population trends, and much of CEBRAP's early research was in the area of demographics. The Ford Foundation had determined that CEBRAP had strong links to the Sao Paulo establishment that would help it to survive under the military regime. In a report submitted to the foundation in 1970, consultant Frank Bonilla reported that CEBRAP's relationships were "quite diversified both at the level of individuals and at the level of relations with institutions." 3 The Ford Foundation consulted with businesspeople and economists from government institutions, as well as a number o f lawyers, journalists, and political leaders, before deciding CEBRAP would be viable. CEBRAP also had strong connections to Catholic Church officials in Sao Paulo, particularly through Candido Procopio. This reflects Brazilian cultural traditions in which personal contacts are often more important than ideological differ-

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53

ences. Political winds may shift, and today's pariahs may be tomorrow's patrons. In addition to its research activities, CEBRAP promised Ford that it would serve as a catalyst for social science development in Brazil by holding conferences and meetings, bringing together groups of social scientists, stimulating interdisciplinary dialogue, and helping social scientists to complete projects that may have been interrupted. The organization also planned to play an educational function as soon as it could do so without "provoking restrictions from governmental authorities." 4 T h e relationship with the Ford F o u n d a t i o n worked so well because fundamentally the foundation's priorities were compatible with those of CEBRAP's founders. The top officials of Ford's Latin American program were liberal academics, many of whom had been active in the John F. Kennedy administration. They were critical of the Vietnam War and were eager not to repeat the mistakes of uncritical anticommunism. The director of the Latin American program, Kalman Silvert, was a distinguished political scientist who specialized in Latin American affairs. Ford had become interested in Latin America only at the end of the 1950s. The hostility shown toward Vice President Richard Nixon during his Latin American trip in 1958 and the triumph of Fidel Castro in 1959 made Latin America a priority in the struggle to find a democratic response to communism. On an early trip to Brazil a Ford team was impressed by the country and concluded that it was "ready for transformation . . . to the condition of a 'real nation,' instead of a coastal strip, semi-dependent on Europe and the United States."5 This was not phrased very diplomatically, but it expressed concerns similar to those of Latin American social scientists who were writing on dependency. The decision to fund the social sciences, especially leftist social scientists, was controversial in the New York headquarters. Many directors thought such a move might alienate either the Brazilian government or U.S. officials. Silvert defended the program strongly, however, and Ford maintained a strong commitment to Brazilian social science. Over the years up to 1992, the Ford Foundation gave $2,216,003 for research in economics, demography, sociology, and political science in Brazil. 6 S u p p o r t went to centers at several Brazilian universities, to a foundation studying women's issues and education, and to the Getulio Vargas Foundation for work in economics and business. Even before Cardoso was elected president, Ford thought its Brazilian programs had been fairly successful in helping Brazil to build an effective social science infrastructure. In addition to Cardoso, the core senior staff at CEBRAP included

54

Fernando Henrique

Cardoso

six distinguished social scientists: José Arthur Giannotti, a philosopher who had written a book on J o h n Stuart Mill and who was a central figure in the Marx Seminar; Càndido P r o c ó p i o Ferreira de Camargo, a sociologist specializing in religion, social movements, and education who had c o n n e c t i o n s to the Catholic Church; J u a r e z Rubens Brandào Lopes, a sociologist specializing in employment and labor relations; Paul Singer, an Austrian economist specializing in economic development; Elza Salvatori Berquó, a statistician who published extensively on population trends in Sào Paulo and Brazil; and Otàvio Ianni, a sociologist with a specialization in class, race, and development in Brazil who joined the group in 1970. All of these staff members had been associated with the University of Sào Paulo, all except Singer with the Faculty of Philosophy, Sciences, and Letters. Five of the seven (Cardoso, Gianotti, Lopes, Singer, and Ianni) had been members of the Marx Seminar. Four of the seven were sociologists. All had doctorates and were in the prime of their professional careers. In addition to this historical nucleus, a number of key staff members joined CEBRAP in the 1970s. These specialists were not from Sào Paulo and had no history of close association with the members of the nucleus. This break from the University of Sào Paulo's tradition of recruiting from within helped to give CEBRAP national prominence. The specialists included Bolivar Lamounier, a political scientist specializing in political parties, ideologies, and voting behavior; Carlos Esteban Martins, a specialist on popular culture, technology, and politics; Francisco Maria Cavalcanti de Oliveira, a specialist on economic development; José Serra, an economist who returned from exile in Chile; and Vilmar Evangelista Faria, a specialist on the social psychology of political movements. Two other key figures, Francisco Weffort, a specialist on labor movements, and Boris Fausto, a historian, never became CEBRAP staff members but played a key role in several CEBRAP projects. Both were close to Cardoso and the other members of the historical nucleus from the days of the Marx Seminar at the University of Sào Paulo. CEBRAP was unabashedly elitist, very much out of synch with the norms among progressive intellectuals at the time, which stressed egalitarianism and collective decisionmaking. A staff position at CEBRAP was awarded on the basis o f outstanding scholarly accomplishment, although there was an understanding that professors who had been "retired" by the military government had special priority. Those seeking admission were advised to "make a name for yourself first, then bargain." Younger people were brought in to work on specific projects, but they had little opportunity to work their way up into the organizational elite. Many went on to positions at universities or

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55

other institutions, their careers having been boosted by their work at CEBRAP, but CEBRAP itself provided permanent positions for few of them. Decisions within the organization were generally made by a troika, membership in which rotated among Cardoso, Lopes, Singer, Giannotti, and Procópio. From 1969 to 1984, the presidents were Procópio, Lopes, Cardoso, and Giannotti. CEBRAP's elitism was not just a formal, organizational matter; it represented deference to the outstanding abilities and accomplishments of the founding members. In his history of CEBRAP, Bernardo S o r j observes t h a t the d i s t i n g u i s h e d p h i l o s o p h e r J o s é A r t h u r Giannotti played an important role as a kind of "theoretical superego, guardian of orthodoxy for some, motivator and source of theoretical inspiration for others." But by far the most important figure, Sorj observes, was Cardoso, since "the quality and diversity of his work, as well as his personal charisma and wide and varied network of relationships in Brazil and abroad, made him the pivot of the organization. Without a doubt the person with the greatest national and international renown, he maintained a clear leadership role among the younger staff members and the most complex relationships with the members of his own generation." 7 The 1970s was a decade of intensive intellectual and organizational activity for Cardoso. The focus of his efforts gradually shifted from traditional academic scholarship to applied social science. He found little time to write detailed scholarly treatises that refined and developed his ideas. In addition to playing a key role in CEBRAP, he traveled all over the world attending conferences, teaching courses, and giving invited lectures. He wrote many essays and articles, some of which were later collected and published in book form. As was his custom, he did a tremendous amount of reading; he describes himself as a person who "reads everything." This reading included a great deal of economics, including theorists of all varieties and applied work relevant to Latin America. He also read everything he could on Brazilian and Latin American politics and wrote numerous essays on possibilities for political reform. Cardoso's scholarly work during the 1970s falls into three categories. First, he continued to write about dependency and dependency theory. He debated with other social scientists within the dependency tradition and tried to clarify the logical nature of the theory. As part of this interest, he debated the nature of Marxist theory with a number of other thinkers, with a major focus on the relationship between theory and practice, on how academic ideas can have an impact on the real world. Second, he developed an interest in urban problems, especially those of the city of Sào Paulo. This interest, which he shared with a number of other scholars at CEBRAP, led to

56

Femando

Henrique

Cardoso

the publication of CEBRAP's most important book, Sâo Paulo 1975: Growth and Poverty. The book was a masterpiece of social science advocacy, and it had enormous political impact within Brazil; it argued that the "economic miracle" that had exploded under the military regime was causing increased misery for a substantial portion of the population. Third, Cardoso analyzed the alignment of political forces in Brazil. Here he was struggling to find how to make a successful transition from military dictatorship to a democratic and socially progressive regime. This work was published in newspapers, magazines, and book chapters.

DEBATING THE NATURE OF SOCIAL SCIENCE

Although Dependency and Development was widely read, some social scientists were puzzled at its failure to take a clear stance on certain theoretical issues. In November 1969 Francisco Weffort gave a seminar paper entitled "Notes About the Theory of Dependency: Theory of Classes or National Ideology" at the Latin American Faculty of Social Sciences in Santiago, Chile. 8 Weffort thought dependency theory strayed too far from class analysis. He argued that Cardoso and Faletto had used dependency as a "totalizing concept," replacing traditional Marxist concepts such as imperialism and class struggle.9 On a visit to Santiago, Cardoso responded to Weffort's paper. This debate helped to clarify the ways the logic of Cardoso's thinking differed from that of traditional Marxist social science. Cardoso insisted that he and Faletto "have no intention to simply substitute 'Imperialism' with another entelechy, 'Dependency.'" 1 0 Entelechy is a technical term from Aristotelian idealist philosophy that refers to a force that reveals the truth about existence by actualizing its inherent potentialities. In using this term, Cardoso was chiding his former student—and by implication many other Marxist social scientists—for falling into the trap of making Marxism an idealistic doctrine rather than a "materialist" or empirical social science. Rather than be guided by a priori concepts, he and Faletto wanted to study socioeconomic patterns in specific countries at particular points in time. Cardoso's response to Weffort was an essay titled '"Theory of Dependency' or Concrete Analyses of Situations of Dependency," 11 which was published by CEBRAP in its first book, On Theory and Method in Sociology. In this important essay Cardoso argues that the value of the dependency concept, as he and Faletto used it, was to draw attention away from sterile, formalistic theoretical debates and to focus it on what was really happening in the here and now. In ana-

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57

lyzing current developments, they used a variety of concepts, including Marxist ideas about social classes and nationalist ideas about the role of the state. The point was not to argue about which concepts were best but to understand the unique dynamics of each situation of dependency. Cardoso insisted that "in theoretical and methodological terms, it would be a step backward, in an essay which characterizes situations of dependency, to focus only on the general contradictions between class and production relations, as Weffort wants to do, without demonstrating that they are articulated, even today, by means of the state and the nation." 12 Cardoso was not willing, however, to cede the mantle of Marxism to his opponents in this debate. He insisted that his work was continuing the Marxist tradition in a new historical context. Marx may have focused largely on economic and class relations in his studies of nineteenth-century English society, but that was because he was studying a competitive capitalist economy with little state involvement. If Marx had been studying mid-twentieth-century monopoly capitalist societies, he would have incorporated the increased role of the state in his analyses just as Cardoso was now doing. Cardoso documented his argument with extensive quotes from the founder of Soviet communism, V. I. Lenin, who had discussed South American dependency in terms similar to those used by Cardoso and Faletto. Cardoso thought Lenin was responding to twentieth-century developments Marx had not anticipated. Cardoso stressed repeatedly that researchers should focus on specific situations of dependency rather than fall into the trap of writing about the theory of dependency in abstract terms. At times it seemed as if he were arguing with a wall, and he became more and more exasperated with academic social scientists who were interested more in proving their theories correct than in understanding what was going on around them. At a meeting of the Latin American Studies Association in Atlanta, Georgia, in 1976, Cardoso unleashed a biting attack on "the present-day butterfly collectors who abound in the social sciences and who stroll through history classifying types of dependency, modes of production, and laws of development, with the blissful illusion that their findings can remove from history all its ambiguities, conjectures.and surprises." He satirized academic gatherings as ritualistic encounters at which "versions of the same myth are constandy repeated: dependency and development, exploitation and wealth, backwardness and sophisticated technology, unemployment and extreme concentration of income." He told the attendees that an observer from outer space, arriving at such a convention, would conclude that "the brains of these beings appear to limit their images and thoughts to binary opposites." 13

58

Fernando Henricjue Cardoso

Cardoso had little patience for arguments between binary opposites. He believed "dependency, monopoly capitalism and development are not contradictory terms; there occurs a type of dependent capitalist development in the sectors of the Third World integrated into the new forms of monopolistic expansion." 14 This could clearly be observed in the economic boom going on in Brazil at the time. What was needed, Cardoso thought, was more detailed historical research about specific countries rather than theoretical formalizations or debates between ideological extremes. Cardoso urged the social scientists not to try to imitate physicists or chemists, whose subject matter could be explained with highly formalized theories that explained precisely measured quantitative data. Instead, he thought they should be more like historians, focusing their attention on unique events and historical conjunctures. He stated: I do not agree with the idea that, to improve the quality of analysis, the theory of dependency should be formalized so that, after testing hypotheses derived from this formalization, one could venture out into the world waving the b a n n e r of the p e r c e n t a g e of variance e x p l a i n e d by e a c h f a c t o r w i t h i n t h e s i t u a t i o n o f d e p e n d e n c e . Instead of asking for analyses within the mold of empiricist structural-functionalism, it would be better to ask for an improvement in the quality of historical-structural analysis. 15

Cardoso's speech to the Latin Americanists was titled "The Consumption of Dependency Theory in the United States," and he was particularly critical of Americans and Europeans who extracted dependency theory from its historical context and made it into an abstract theory to be elaborated and tested with whatever data they might have at hand. This, he argued, was a form of intellectual imperialism, using Latin American ideas to advance academic careers in developed nations. T h e fundamental problem, however, was not between North Americans and Latin Americans: Cardoso was fed up with academic abstractions regardless of their national origin.

G R O W T H AND POVERTY IN S A O P A U L O

If the theoretical debates seemed sterile, the applied world around CEBRAP was buzzing. Sao Paulo was rapidly becoming one of the world's largest cities, a booming industrial and financial capital and the center of a large agricultural region. People flocked to the city from all over Brazil in search of economic opportunity. Sao Paulo generated great wealth, but it was surrounded by miserable shanty-

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59

towns. The Ford Foundation and other donors were eager to learn about the population dynamics, and Cardoso and the other principals at CEBRAP shared their interest. Although he is n o t primarily an urban sociologist, Cardoso was familiar with some of t h e key issues in the area. In 1969 h e h a d attended a conference on social participation in Mexico City. He presented a paper that explored the concept of marginality, which was widely used in discussions of urban populations in Latin America. 1 6 In a related paper he examined the theory of the "marginal mass" in the writings of José Nun. 1 7 Cardoso thought the concept of marginality had been used descriptively without a sound theoretical basis. The marginal population is unemployed much of the time and thus may serve as part of the "reserve army of the unemployed" discussed in classical Marxist texts. Yet the marginal population may not be central to the capital accumulation process. Cardoso thought it was important not simply to contrast participation with nonparticipation, as if participation were necessarily good and nonparticipation necessarily bad. Different social strata participate to varying degrees and in different ways depending on the social situation at a particular point in history. Cardoso also examined classical social theories of the city with a focus on how those theories applied to the Latin American case. 18 He f o u n d that in European political theory the city was associated with economic markets and with politics. Cities provided the labor force that was the key to Marxist dynamics. Latin American cities developed as part of Spanish and Portuguese commercial policies rather than independently, as did the early European cities. The Portuguese tradition was less rigid than the Spanish in its urban design, but in colonial times the cities were not really free in either system. With indep e n d e n c e , the m a j o r cities b e c a m e m o r e i n d e p e n d e n t , especially w h e n t h e c o m m e r c i a l m o n o p o l i e s were b r o k e n . A l t h o u g h Latin America has e x p e r i e n c e d many peasant revolts, the political outcomes have generally d e p e n d e d on urban developments. At the time, French philosopher Régis Debray was fairly influential in leftist Latin American circles. Debray was a partisan of Fidel Castro and Che Guevara, and he developed a theory of rural focos (regions of guerrilla activity) that would lead a socialist revolution against the c o r r u p t cities. Although something like that may have h a p p e n e d in Cuba, Cardoso t h o u g h t it presented a false image of rural purity versus u r b a n corruption. He did n o t think such movem e n t s were likely to be successful in Brazil or o t h e r m a j o r Latin American countries. In his view, the f u t u r e d e v e l o p m e n t of Latin American societies would require the development of civic culture in the cities.

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Cardoso

Over the years, m u c h of Cardoso's research had been d o n e in urban settings. In 1958 he published an article on the polarization of interests between employers and workers in Sào Paulo industry. 19 His work on slavery in Rio Grande do Sul also involved some study of the city of Pòrto Alegre. In some of this work, the primary focus was on economic or class relationships, and the fact that the data were collected f r o m a particular city was secondary. Some of his writings, however, began to focus on the dynamics within the city of Sào Paulo. In 1959 he and Otávio Ianni collaborated on an article on the conditions and effects of industrialization in Sào Paulo. 2 0 Cardoso also published several articles on his own on the process of industrialization in Sào Paulo. 21 Other researchers at CEBRAP also studied conditions in Sào Paulo, including a study of abandoned children commissioned by the Sào Paulo State Tribunal of Justice and a n u m b e r of technical demographic reports. The study that had by far the greatest impact was Sào Paulo 1975: Growth and Poverty, a book-length report sponsored by the Commission for Justice and Peace of the Catholic Archdiocese of Sào Paulo. The book was a condensation of work CEBRAP and some associates had d o n e in 1975. Cardoso and seven colleagues—Càndido Procópio Ferreira de Camargo, Frederico Mazzucchelli, José Alvaro Moisés, Lúcio Kowarick, Maria H e r m i n i a Tavares de Almeida, Paul Singer, and Vinicus Caldeira Brant—wrote the book. 2 2 The book is only 128 pages long and is illustrated with excellent black-and-white photographs of city scenes, neighborhoods, and people at work; it also contains many statistical charts and graphs. The book was released on J u n e 24, 1976—the day of the Feast of St. J o h n the Baptist—and it begins with an introduction by Paulo Evaristo, Cardinal Arns, the archbishop of Sào Paulo. The archbishop sets the ideological tone for the volume by d e n o u n c i n g the "evil" of a "pattern of economic growth based on the destruction of the lives of workers obliged to l a b o u r excessive h o u r s to c o m p e n s a t e f o r the reduced purchasing power of their wages." He criticizes the increasing gap between the rich and the poor and commits the church to "take its place alongside those who are downtrodden and can find no justice." 2 3 The book begins with an economic overview of the concentration of Brazil's industrial activity in the city of Sào Paulo, which it suggests has drawn wealth away f r o m the rest of the country. Overpopulation has led to poor living conditions, not for the population as a whole but for those at the bottom of the class structure—particularly recent migrants who make up a large proportion of the population. Urban growth has been chaotic and unplanned, with many neighborhoods

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61

lacking basic services such as streetlights, running water, and sewers. Graphs show that infant mortality rates have been increasing since 1960, particularly during the period since the military coup d'état. The authors argue that this increase in misery was caused not by an economic recession but rather by rapid economic growth under an exploitative capitalist model. The text uses strong anticapitalist rhetoric: "The rationale of the accumulation process to which recent development in Brazil has been subordinated is based directly on bleeding dry the working classes. . . . For capitalists, the city is a source of profits. For workers it is a way of life." 24 Despite economic growth, real wages have declined, and workers must work more hours to earn enough to survive. The minimum wage is "ridiculously low," leading to "gross exploitation of unskilled workers." 25 The tone of the book is very different from that of Cardoso's single-authored works, which reflects the fact that several of the authors were much to the left of Cardoso. Fernando Henrique particularly disagreed with Procopio and Kowarick about the assumption that increased poverty was an inevitable consequence of capitalist economic development. Although this view was almost universally accepted by the left at the time, Cardoso never accepted it. He thought economic development was good but that the regime needed to do more to distribute the benefits to the poorest classes. In his view, the book went too far in criticizing capitalist development instead of insisting that social reforms should accompany development. He thought the book was politically effective largely for the wrong reasons: because it catered to simplistic and inaccurate anticapitalist sentiments. Although the rhetoric was harsh, it was backed up with statistical tables that documented economic trends and their effects on health, education, and community life. In many families education was interrupted, and children under fifteen were working instead of going to school. Female and older workers, as well as black and mulatto workers, were greatly discriminated against. Cardoso fully agreed with the solution offered, which was that democratic participation by the population in the political process was needed. CEBRAP and others had done a number of opinion surveys that provided a basis for appraising the beliefs and attitudes of the population. The book includes an analysis of voting patterns from the early 1970s, showing that they reflect socioeconomic differences. Those in low-status occupations voted overwhelmingly for the left-ofcenter Brazilian Democratic Movement (MDB), whereas those in higher-status occupations were somewhat more likely to vote for the pro-government Alliance for National Renewal (ARENA). A number of citizens' neighborhood organizations were growing, despite the

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fact that "the entire organization of the Brazilian state is designed to prevent and, when necessary, repress organized forms of opposition.'^ Trade union activity in particular had been greatly suppressed by the military government. In the peripheral neighborhoods where most of the working class lives, only about 5 percent of the population participated in unions. The authors note a certain amount of apathy and resignation among the population, which is understandable in view of its living conditions and lack of political rights. But there was also a revival of religious activism in both the popular religions and the Catholic Church. A priority for those seeking to help the poor must be to organize "various kinds of community associations at the grass roots level" that could "play a decisive role in safeguarding individuals and allowing them to voice their most pressing needs." 27 These community associations could form links to support statewide or national independent organizations. The authors conclude that "unless the different sectors of the people with all their different points of view participate through their organizations, any improvements in general living standards will be eroded by bureaucracy and elitism. The organization of society to the real benefit of the workers can only be based on ample grass roots freedom." 28 Sao Paulo: Growth and Poverty received excellent reviews and sold well. A review in Veja, Brazil's leading weekly news magazine, said "the apocalyptic visions in [the book] are the result of a unique methodological approach. For the first time an attempt is made to think of Sao Paulo from the point of view of the conditions in which its inhabitants, and especially its workers, live."29 A writer for a leading intellectual journal opined that "the seriousness of the research and the accuracy of the analysis demonstrate the high level which has been reached in the work of social science specialists in Brazil."30 Shortly after the book was published, a bomb set off by a group called the Brazilian Anti-Communist Alliance exploded in the CEBRAP offices. The state secretary of public security, Colonel Erasmo Dias, gave a press interview in which he accused CEBRAP of setting off the bomb as a publicity stunt. He denounced the book as "essentially Marxist" and a distortion that gave foreign audiences a false image of Sao Paulo. He brandished a copy of the book, saying "this is my bible, I read this book every day in order to get angry."31 This kind of social science was much more threatening to the military regime than were philosophical debates about social theory and methods, which the military viewed as harmless. The military police responded by calling the leading members of CEBRAP, including Cardoso, to police headquarters; Fernando Henrique was blindfolded

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at the entrance. At the time he thought, "What an idiot I am. I should have stayed abroad. There I am a friend of the king." 32 The police interrogation was a dialogue of the absurd, focusing on a meeting Cardoso had with Earnest Mandel in Mexico City. Mandel is a prominent Belgian intellectual who was active in an international Trotskyist movement. The inquisitors asked Cardoso a long series of questions about his meeting with Mandel, not believing the two merely discussed social theory. (They had met at the airport and had chatted between flights.) At one point during the interrogation, Cardoso had to go to the bathroom, and they took him to a cell where he saw a man being tortured. He knew the Brazilian police used torture in their suppression of the armed revolutionary movements, but seeing it firsthand was traumatic. Three years later, when Cardoso received an honorary degree from Rutgers University, the university officials placed the academic regalia over his head and shoulders. T h e cap and gown reminded him of the blindfolding in Sao Paulo, which he could not get out of his mind for the remainder of the ceremony. 33 Many Brazilians had tolerated torture as a necessary evil to suppress terrorist groups, but the arrest of prominent figures such as Cardoso was not well received. Years later, Senator Ronan Tito of Minas Gerais told Cardoso on the floor of the Senate that "when the word was passed, from mouth to mouth, that you had been arrested in Sao Paulo, and blindfolded, it caused a very great revulsion there in the interior of Minas Gerais, and we were all indignant many times at that brutal act, that stupid act of the dictatorship . . . you were and continue to be our guru." 34 Fortunately, many officers within the military also objected to torture and violations of human rights, especially when they could not be justified as necessary to suppress a terrorist organization. The fact that Cardoso was the son of a general may have helped him, although he never brought up his family connections. In any event, nothing came o f the p o l i c e i n t e r r o g a t i o n , and CEBRAP c o n t i n u e d its research.

THE AMAZON

Another hot topic, both within Brazil and internationally because of its environmental implications, was development in the Amazon Basin. In 1977 Cardoso and Geraldo Müller published Amazonia: Expansion of Capitalism, based on research the two had done at CEBRAP in 1973-1974 in collaboration with Tereza Martha Smith Vasconcelos; Juarez Brandáo Lopes consulted on the socioeconomic

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chapters. T h e research was supported in part by a consortium o f Latin American research centers interested in population policy, headed by a UN agency c e n t e r e d in Santiago, Chile. T h e b o o k is largely historical and descriptive; it is full o f statistical information on demographic and economic trends and contains a description of the legislation creating the agencies to manage Amazonian development. T h e history o f the Amazon region has been one of booms and busts created by trends in international commodity markets. By far the most important was the rubber boom, which began in the nineteenth century and crashed in the 1920s when the British smuggled r u b b e r plants out o f Brazil and began growing them in Malaysia. Sociologically, this development was run through a system known as aviamento, which meant traders advanced a year's worth of supplies to rubber-gathering bosses who contracted to deliver the year's rubber harvest to them. By the 1970s, however, this policy had largely been replaced by a more conventional warehousing system in which supplies were purchased and product was sold in more competitive markets. Similar networks marketed other products such as wood, nuts, and spices. Cardoso and Miiller do not take a strong position for or against Amazonian development. They are aware o f the ecological issues and the suffering o f the Indian population, but these topics are only mentioned occasionally. T h e r e are a few isolated segments of anticapitalist rhetoric, such as the following: " T h e suffering experienced by the people of the south in the process of accumulation was not enough, now the process is to be repeated in Amazonia—with, undoubtedly, great thrusts of heroism for those able to work on the exhausting and monotonous burden of piling up more value for the capitalists." 35 But this rhetoric is not typical of the book, which is full of dry economic, d e m o g r a p h i c , and legal descriptions. T h e authors r e g r e t that in being incorporated into the national economy many workers are suffering, and Amazonia is losing its mythical dimension as a tropical paradise; yet they Do not wish to negate that the region is being transformed, that there exists pioneerism there, and that conditions for maintaining the well-being of the population may be better in the present than they were in the past. But the type of growth adopted—exploitative of labor and concentrating profits and riches—shows that left to its own devices it will not bring improvements for the population or correct distortions. 36

Since the 1946 constitution a number o f national agencies have been charged with Amazonian development. T h e 1946 constitution

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committed 3 percent of national tax revenue for that purpose for at least twenty years. This expansion was motivated in part by concern about national security. The region is sparsely populated and might be vulnerable to colonization or annexation by neighboring countries. There are periodic rumors of the possible development and internationalization of the economy by U.S. or other foreign interests. Consequently, the military has made Amazonian development a priority for strategic reasons. The region also serves as a place to which to export surplus population, particularly from the overpopulated and drought-ridden areas of the northeast. The military governments spent considerable resources on highways to open up Amazonian regions. It is not clear that these expenditures were worthwhile because the quality of the roads was often low and traffic was sparse. The economy and social order of the Amazonian communities were disrupted when large numbers of construction workers and new migrants came in. A crude frontier culture developed in small towns, where workers from the jungles lost their money in drunken orgies and picked up venereal diseases. Native forests were cut down and were replaced with commercial crops. Cardoso and Miiller were not opposed to all economic development, but they advocated a balanced and planned approach. Although the region had been opened up by government policy, much of the life was lawless, and good people were "tormented by the inhuman conditions of life in the jungle." 3 7 What was needed, the local people said, was a locally developed "tropical technology" to enable the region to control its own development rather than being exploited by firms from other Brazilian regions or foreign countries.

ANALYZING BRAZILIAN POLITICS

As soon as CEBRAP was established, Cardoso began to write a series of seminar papers on the political situation in Brazil. By this time the military regime was well established. This was the period of the "Brazilian miracle," and economic growth often reached 10 percent a year. The armed assault by student radicals had been put down. But as a dialectical thinker Cardoso believed every situation contained the seeds of its transformation. He, like many other Brazilians, was eager to find a political strategy that could lead to democratization and social reform. As usual, Cardoso began by reading and criticizing the scholarly literature on the topic. Cardoso thought prominent theorists such as Celso Furtado, Helio Jaguaribe, and Candido Mendes were overly

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determinist in their analytical logic. 3 8 These theorists assumed political events were determined by profound social forces. If this were true, they should have been able to predict the general course of political development. They were not, however, so they filled in the gaps with voluntarist explanations that blamed things on the actions of particular leaders or with normative arguments that simply advocated what the writer believed should be done without explaining the political forces that could get there. Cardoso recognized that structural constraints limit what a government can do. When faced with similar constraints, Latin American countries have followed a wide range of policies ranging from Cuban revolutionary socialism to Peruvian leftist militarism to Chilean free market capitalism. T h e Brazilian military might have followed a nationalist developmental policy such as that advocated by the ideologues of previous governments; instead, it had chosen to integrate much of the Brazilian economy into the world capitalist system. This policy was succeeding in bringing about rapid economic growth, which was possible b e c a u s e the world situation had c h a n g e d . Contemporary multinational corporations wanted to invest in industrial development in countries such as Brazil. International capitalism was not trying to follow the old-fashioned colonialist strategy o f restricting Third World countries to exporting primary products and importing industrial goods. A major issue at the time, particularly among leftist social scientists, was to rethink the significance of the 1964 military coup d'état. Why had it happened when it did? Could it have been prevented? Was it a reactionary attempt to stop progress or a bourgeois revolutionary act aimed at stimulating capitalist development? What could be done to reverse it and set the country back on the path to social democracy? This was an intellectual task similar to Karl Marx's effort to understand the defeat of the left in France in 1848, and Cardoso approached it with intellectual tools similar to those Marx had used in The Eighteenth Brumaire of Louis Bonaparte. He began by looking for e c o n o m i c c o n t r a d i c t i o n s as underlying causes o f the political changes. In a talk first presented at Yale University in April 1971, he wrote, "My main hypothesis to explain such sweeping changes in the relative power positions of all the major political actors is that the accumulation process required that the instruments of pressure and defense available to the popular classes be dismantled." 3 9 This passage led one writer to classify Cardoso as one of the "more clearly determinist" 4 0 analysts o f the coup. In thinking further, however, Cardoso modified his position. In a widely circulated essay based on the same talk, Cardoso added a passage in which he stated:

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I do not believe that 1964 was written inexorably in the economic logic of history. Instead, I believe that the political process plays an active role in the definition of the course of events. Or, better, if it is true that inflation, the sharpening of the class struggle, and the difficulty of maintaining the rhythm of capitalist expansion in the socioeconomic conditions prevailing during the Goulart government radicalized the political forces and moved the institutional bases of the regime, then the insurrectional movement was o n e of the possible solutions, not the only one, as an economistic view of history would claim. 4 1

Although Cardoso was using Marxist concepts and ideas, his analysis of the coup had much in common with the interpretations of social scientists who used other theories such as rational choice theory or game theory. 42 This did not concern him since there was no reason others should not use different theoretical tools to arrive at the same understanding of historical events. In his 1969 French article on the Marxist theory of social change, Cardoso suggested that more modern philosophical models, such as cybernetic theory, might be able to incorporate the perspectives he found in the Marxian dialectic. Although his ideas diverged from those of most scholars who called themselves Marxists, Cardoso never found it necessary to break with Marxism because his interpretation of Marx gave him the flexibility to include all of the factors he thought were important. He remained emotionally attached to the Marxist goal of ending class exploitation even as he became more critical of Marxist economic theories. Ever since his studies with Florestan Fernandes, Cardoso had believed in treating social theory as a toolbox from which one selects the best tool to do a particular job. As time went on, he simply began to use other tools more often, and references to Marxist concepts and arguments became less and less frequent, although they never completely disappeared. Sometimes Cardoso seemed to try to force new ideas into a Marxian framework. U.S. sociologist J o s e p h Kahl, for example, thought Cardoso's arguments about building democracy through civic organization sounded Tocquevillian, but Cardoso insisted they could also be seen as Maoist. 43 It is hard to imagine two social theorists more different than Alexis de Tocqueville, the champion of American small-town democracy, and Mao Tse-tung, the advocate of mass revolutionary violence. And Kahl was right in detecting a Tocquevillian cast to Cardoso's thinking. Cardoso was evolving into a believer in American-style pluralistic democracy rather than a Maoist revolutionary. But different theories can lead to the same conclusions when presented with the same historical reality, just as in their day de

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Tocqueville and Marx formed remarkably similar interpretations of the 1948 French Revolution. As always, Cardoso read widely, and he frequently cited social theorists. In his thinking on democratization, he cited Schumpeter, Mosca, and Italian writer Norberto Bobbio. As he became involved in legislative politics, he relied most frequently on Max Weber, the leading sociologist of bureaucracy and public administration. He thought increasingly about politics as an independent realm rather than a reflection of class or economic interests. Cardoso observed that analysts o f Brazilian politics varied between two poles: those who saw the state as the controlling center and those who thought the state was merely the tool of the dominant social classes. 44 In fact, Cardoso argued, some periods in Brazilian history seemed to fit the first model and others fit the second, so each historical period had to be studied separately. In examining the period since 1964, Cardoso found the regime had been supported by businesspeople and much of the middle class but was not controlled by these groups. Active control was maintained by the military as a social institution. T h e only way to explain specific policy developments was to look at the preferences and actions of groups and factions within the military and other dominant groups. One could not explain the policies simply as reflections of class interests or economic trends. In some ways Brazil was a country of dualities. Two conflicting political styles were present: a patrimonialist one descended from the old colonial state and a modern style based on the emerging capitalist system. 45 There was also a split between the emerging civil society, especially in the state of Sao Paulo, and the governmental hierarchies in Brasilia and Rio de J a n e i r o . 4 6 T h e best strategy for the future, Cardoso believed, was to strengthen the progressive side of these dualities. A new arrangement of civil-state relationships was needed to counterbalance the historical tendency toward bureaucratization, toward control by government and economic bureaucracies. In terms of political theory, Cardoso thought the contemporary Brazilian state could best be categorized as authoritarian rather than fascist or totalitarian. Simply calling it a "bourgeois state," in Marxist terms, revealed nothing useful about the policies it was likely to follow. The military, big business, and the middle classes were able to rule because they had a model of development they could agree on while containing the popular threat. Attempts by the radical left to overthrow this political coalition had failed, thereby pushing the government to be more repressive and inadvertently reinforcing the hard-line elements in the military. As is often the case, the extreme groups on one side strengthened those on the other. An escalation of

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extremes had occurred that might have been avoided if the leaders in the middle had been more effective. The intellectuals at CEBRAP followed these events closely, and as a group they were becoming increasingly social democratic in their thinking. Many felt the left had been ineffective largely because it had no persuasive alternative to offer the people. Rapid economic growth seemed to undercut the argument that socialism was economically necessary. The success of capitalist development in many Asian countries contrasted with disappointing results in Cuba and Eastern Europe. The Soviet invasion of Czechoslovakia in 1968 had disillusioned many people who thought "socialism with a human face" was a viable alternative. These people were becoming more and more convinced that democracy was an important value, an end in itself. Democracy was not just something the left could use to win power; nor would a socialist victory necessarily guarantee democracy. At CEBRAP regular roundtable sessions were held at which leading researchers presented their latest work and received vigorous feedback from everyone in the group. Paul Singer remembers that a decisive turning point was a roundtable in 1978 at which Cardoso defended the view that the military regime was playing a progressive role sociologically. Brazilian society was becoming more modern with more developed civil institutions, in his view. By this time everyone had recognized that Brazil was growing economically under the military, but many still felt the military was repressing social development. In Singer's view, this argument may have been a "dividing of the waters" for Cardoso in his transition from radical leftist to moderate reformer. 47 An important factor in Cardoso's change in thinking was hard statistical data about social changes. In 1971, when Cardoso wrote a chapter for the book Authoritarian Brazil, he did not think there was any chance for a metamorphosis of the Brazilian regime. By 1983, when he wrote his c h a p t e r p u b l i s h e d in 1988 in the b o o k Democratizing Brazil, Cardoso included extensive statistical tables that showed that not only had there been tremendous economic growth but that the benefits had trickled down to the population in "flood proportions." Cardoso presented statistics showing that "whereas in 1970, only a quarter of Brazil's households had refrigerators and televisions, by 1980 more than half did." Real average income had increased almost 89 percent for the country as a whole. Literacy rates and school enrollments were up. The inequality coefficients were as bad as ever, but the data showed that real social development had taken place, not just economic growth with social stagnation as many had expected. 48 Cardoso thought Brazil had been forced to choose between two

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developmental strategies: (1) populist developmentalism, which mobilizes the masses in support of nationalist and redistributionist policies, and (2) associated developmentalism, which works with multinational corporations and agencies. 4 9 The first model was popular with the left, but many countries around the world were having success with the second. The merits of the two models could still be debated, but the military had chosen associated developmentalism, and there was no realistic possibility of reversing its decision in light o f the model's considerable successes. In Cardoso's view, the left needed to accept the fact that it had lost the political struggle over that issue; this did not mean, however, that the left should give up on the struggle for democracy. Democracy was possible under either capitalism or socialism, and the left needed to mobilize in support of democracy as an end in itself. Democratic reform would be possible, in Cardoso's view, because of splits within the power structure. The regime was divided between hard-line elements, which favored a strong authoritarian system, and reformist groups, which advocated democratic opening. Cardoso thought the best strategy was to mobilize the population nonviolently in support of democratic opening. One way to do this was to work from the grassroots, organizing pressure groups and movements for social change; another was to support democratic and progressive politicians within the electoral system, even though elections were manipulated and restricted by the military regime.

JOURNALISM AND POLITICAL ORGANIZING

Cardoso decided to act on this conclusion. He had two major ways of helping Brazilian politics move in the direction he thought most promising: As a writer he could bring his ideas to the public through the mass media; as an intellectual with political skills he could help to organize an opposition political party. Since the 1960s Cardoso had contributed an occasional article to magazines and newspapers. In 1972 he began writing a weekly column for the Rio de Janeiro newspaper Opinido.50 The columns provide a weekly window into Cardoso's mind as he touched on topics as diverse as the U.S., Mexican, and Canadian electoral systems, the possibility of Brazil evolving into a one-party system, the fact that there is no specifically Brazilian educational philosophy, the growth of consumerism, rumors of splits within the military, the fact that state enterprises are closely linked to multinational corporations, the coexistence of social chaos and industrial prosperity in Sao Paulo, the reasons Brazil is not a subimperialist power, increasing apathy on college

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campuses, election abuses, and the proper role of opposition governors. One would have to look very carefully to find references to sociological theory or other academic perspectives in Cardoso's journalism. Most of his contributions are short and are focused on current events, much like the writings of other newspaper columnists. Not all of the columns defend strongly held conclusions; some raise a topic for discussion much as a professor does in a classroom. Sometimes Cardoso comments on an interesting development, even though he is not yet sure what to make of it. One theme is consistently addressed, however: the need to organize and build an effective democratic opposition to the military regime. With hindsight, this point seems obvious. In the early 1970s, however, many democrats had given up. The economy was booming, the revolutionary left had been defeated, and public opinion was generally favorable to the military regime. Many of the country's leading leftist leaders had been exiled or their political rights had been canceled by the military regime, so an entire generation of democratic politicians was absent. But history works in strange and unpredictable ways. As it turned out, the suppression of the country's traditional political system created an opportunity for both democratic politics and Cardoso. Brazil's military rulers had always claimed to believe in democracy as an ultimate goal, but they thought the country needed to be guided into it carefully. They decided that Brazil's multiplicity of political parties was part of the problem, so they set up an electoral system that permitted only two political parties. One, ARENA, was intended to be the government party, whereas the MDB was to play the role of loyal opposition. Pundits referred to them as the 'Yes" party and the 'Yes Sir" party. As long as the economy was booming, ARENA was able to win most of the elections with little intervention from the military authorities, who sometimes arbitrarily canceled the candidacies of opposition candidates who were becoming too popular. T h e artificially imposed two-party system had the unanticipated consequence of forcing opposition politicians who wanted to run for office to unite in a single organization rather than split into a number of parties. When discontent grew, as it inevitably does when a government remains in power for too long, it had a ready outlet in the MDB. T h e MDB grew increasingly serious about its role as an opposition party, especially in Sao Paulo where the opposition was well organized. In fact, at o n e time the Sao Paulo party leader, Ulysses Guimaraes, hired CEBRAP to write a draft of a party program. Many of Cardoso's closest friends on the democratic left felt the MDB was hopeless, a mere fig leaf set up by the military to disguise its

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authoritarian rule. Cardoso understood the flaws in the system as well as anyone, but he believed that if he was committed to building democracy, there was no viable alternative to joining the opposition party. He worked hard for the party until the battle for democracy was won and a new constitution was in place. Then in 1988, when the party was at the peak of its power, he resigned. In his resignation speech he recalled: In the beginning of the 1970s, when few intellectuals, among them those whose political rights had been canceled and those who had been exiled, among them the prisoners and the tortured, saw the possibility for democratic reconstruction by means of the political and electoral struggles led by the MDB and by the factions which belonged to it, I threw myself body and soul into this political and party undertaking. I do not regret this decision. From 1974 until today, in almost all the documents, fundamental speeches, campaign programs and party platforms of the MDB . . . there is some contribution of mine. In the party, I learned how to do politics. I became a candidate, I lost and I won. My skin b e c a m e m o r e resistant to criticism and attack, I became seasoned for struggle. 51

In 1974 C a r d o s o h e l p e d to plan the c a m p a i g n of Orestes Quèrcia, an established politician who was one of Cardoso's opponents in the 1994 presidential election. Cardoso worked closely for a number of years with Guimaràes, the national secretary of the MDB, who in many ways was Cardoso's political mentor. He organized conferences on democratization and generally helped to involve intellectuals in the political process. The MDB was a broad coalition made up of established politicians who had been excluded by the military, union leaders, intellectuals, and anyone dissatisfied with military rule. Cardoso was the most p r o m i n e n t representative of the intellectuals—a significant and respected group, especially in the city of Sào Paulo. When the period of exceptional growth known as the Brazilian miracle ended in 1973, the party's popularity increased, and it began to win elections, particularly in the larger cities. Under Brazil's electoral law at that time, one party could present many candidates for the same Senate seat, and the party with the largest total vote placed its leading candidate in office. For the 1978 election to the federal Senate from the state of Sào Paulo, the MDB was running a well-known moderate politician, Franco Montoro, as its top vote getter. Montoro had a good chance to win, but the party leaders thought his candidacy would be enhanced if representatives of the party's various constituencies were on his ticket. They wanted a

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candidate from the intellectual community, and Cardoso's name kept coming up. Cardoso was not sure that placing his name on the ticket was a good idea. At first, he supported another candidate he thought had more voter magnetism. But the party leaders thought he was the best representative of the intellectual community. In internal party meetings Cardoso received strong support from charismatic labor leader Luis Inacio da Silva, better known as Lula, who became his leading opponent on the Workers' Party ticket in the 1994 presidential election. At the party convention Cardoso received 300 votes, compared with 700 for Montoro. Cardoso estimated that perhaps a third of the party delegates who voted for him were people he had reached directly—who had read one of his books, heard one of his speeches, or read an interview in a newspaper. Another problem was that the order that had "retired" Cardoso from the University of Sao Paulo also prohibited him from running for office. The order was of indefinite duration, which was a legal flaw. Cardoso's lawyers obtained a ruling from the electoral tribunal, and eventually from the Supreme Court, that suspensions with no specified time period were improper. Cardoso's candidacy was accepted without an objection from the military government, which no longer had the legal authority to cancel it. Cardoso had no thought of winning the election; his objective was to "incorporate in political life sectors of the population which were against the regime, but which were not attuned to party-political life or to the elections." 52 He was essentially part of Montoro's campaign team. As such, he was the focus of much media attention. Reporters were trying to inform their readers about the significance of a n d possibilities for the country's democratic o p e n i n g , and Fernando Henrique could be counted on to give a thoughtful interview. His background as a leftist intellectual running for election under a military regime made for interesting copy. An edited collection of these interviews, titled Democracy for Change: Thirty Hours of Interviews with Fernando Henrique Cardoso, was published in 1978. The book included excerpts of interviews from most leading newspapers, news weeklies, and magazines published in Brazil. In these interviews Cardoso presented himself as a complex and serious thinker who was grappling with difficult problems. He made it clear that he wanted to be a realistic leader working within the limits of existing political realities. At the same time he was a man of the democratic left, an opponent of dictatorship who favored redistribution of wealth in the interests of the poor. He insisted that "the opposition cannot continue only denouncing the situation, only

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being against. It is necessary to say what one imagines as solutions, to propose remedies and especially to explain how you will apply them, to show who will carry out the transformations." 53 Cardoso was "greatly irritated by the rhetorical radicalism" of leftists who thought they were living at the time of the Russian revolution a n d who "cried because t h e r e was n o Winter Palace in South America." 54 When an interviewer asked him "what, then, is your vision of the world today," he answered: If you want to know my personal statement of faith, I am favorable to abolishing the system of exploiters and exploited! But this is a statement offaith, which has perhaps a biographical or moral importance. What is important is to develop a political attitude, not a moralistic attitude. What is important is to know which forces are moving in a given direction, to introduce the act of faith into the reality of the current situation.55

The interviewer pushed for more details, asking what Cardoso thought of socialism as practiced in the Soviet Union, China, and Cuba. He responded: If you think of Socialism as it is in power, as it exists in this second half of the twentieth century? There is a kind of d i s e n c h a n t m e n t with the myth, you cannot any longer today say that that which was formulated in the 19th century is being carried out in the existing political practice in the Soviet U n i o n or even in China. There is a gap between the ideas of the 19th century and the practice of the 20th century. I think, even as an intellectual, it is important to acknowledge this. To acknowledge it in order to know how to imagine a socialism which corresponds to the o n e which was very alive in the 19th century, which was a sentiment of democracy. Democracy of the sort which I call substantive. 5 6

Cardoso campaigned very hard during the election, much harder than Montoro, who could rely on the familiarity of his name. On a typical day Cardoso left Sao Paulo for the nearby city of Santos, stopping in Cubatao to see a group of friends at the mayor's chambers. After a quick visit he made three or four similar stops before reaching Santos and speaking at a meeting of about a hundred local leaders. Cardoso spoke about the current situation in Brazil, about what should and what should not be done. After hours of enthusiastic discussion he went to a restaurant with local leaders, staying until one or two in the morning. At five the next morning he got up to meet with workers commuting on a special industrial train. The reception from the workers and the union leaders was even more enthusiastic than that from the intellectuals and party activists the day before. Cardoso was pleased that the workers carefully folded the propaganda leaflets

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and put them in their pockets. At the end of the train ride, there was another meeting with union leaders and workers and then a trip to a n o t h e r city hall and MDB office. Cardoso r e t u r n e d to Sao Paulo, only to go out on the campaign trail again. In the election Cardoso came in a very respectable second to Montoro, who won the office. By coming in second, u n d e r Brazilian electoral rules Cardoso won the position of suplente, or alternate, the person who would replace Montoro if he died or retired f r o m office. Cardoso was unaware of this aspect of the law when he agreed to join Montoro's ticket. Montoro was a vigorous figure, an experienced and effective politician who was eager to advance his career. He h a d enough self-confidence not to be awed by Cardoso's intellectual brilliance. Cardoso worked closely with Montoro during the four months between the election and the inauguration of the new Senate, helping him to formulate a policy agenda and cementing his connections with the Sao Paulo intellectual establishment. T h e 1978 e l e c t i o n a n d t h e a s s o c i a t i o n with M o n t o r o gave Cardoso significant n a m e recognition, especially in Sao Paulo. He moved his weekly c o l u m n to the Folha de Sao Paulo, the country's largest circulation daily newspaper, and he wrote frequently for other newspapers and magazines t h r o u g h o u t Brazil. Cardoso also continued to work with CEBRAP and again accepted international appointments. He had visiting positions at the Maison de Sciences Sociales in Paris in 1980 and at the University of California in Berkeley in 1981. (He had held the Simon Bolivar Chair at Cambridge University during the 1976-1977 school year and visited at the University of Paris in 1977.) In 1982 Cardoso began a four-year term as president of the International Sociological Association. Ironically, he told a friend that he was feeling distant f r o m academic sociology at the time and was u n s u r e what to tell the sociologists. He f o u n d that journalists did more of the kind of writing that interested him, articles that untangled the complex strands of change at a particular point in time.

C A R D O S O AND THE WORKERS' PARTY

In the late 1970s the military realized it had made a mistake in setting up a two-party system. Until 1975 it had expected that ARENA would be the government party indefinitely and that the MDB would provide a harmless outlet for opposition feelings. When the economic b o o m e n d e d in 1973, however, ARENA'S popularity dropped. Many people were u n h a p p y about the fact that inflation a n d corruption were as bad u n d e r the military as they had been u n d e r civilian governments. When such discontent arises in a country with a two-party

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political system, voters usually throw out the party that has been in power and give the opposition power. The 1978 elections showed that this pattern was developing in Brazil, especially in the more modern and urbanized parts. To prevent a shift of power to the opposition, the military government changed the rules, allowing multiple parties to be organized. T h e government's supporters gave up the ARENA name, reorganizing under the banner of a new Democratic Social Party (PDS). The PDS hoped the opposition would split into conflicting parties that would attack and undermine each other. This had been a frequent pattern before 1964 when a multiplicity of parties existed, many of which had a regional basis of support or were dominated by a single charismatic leader. The leaders of the MDB, including Cardoso, were eager to avoid a repetition of the past. They decided to keep the existing organization, conforming with the new law by changing the name of the Brazilian Democratic Movement to the Party of the Brazilian Democratic Movement (PMDB). Many of Cardoso's closest friends disagreed with his decision to remain loyal to the PMDB. They were active in founding a new Workers' Party (PT), which included many leftist intellectuals as well as labor leader Luis Inacio da Silva—generally known by his nickname Lula, which he later incorporated into his legal name so it could appear on the ballot. Lula was a good friend of Cardoso's and had been an important supporter of his Senate campaign. Many of Cardoso's friends from the university were enthusiastic about the Workers' Party, as were many leftists from around the world, who saw it as an exemplary alliance of workers and intellectuals. The party was not formally Marxist or socialist, and it tried to avoid using ideological rhetoric, although it had Marxist factions within it. Most Brazilian political parties were electoral machines controlled by professional politicians rather than disciplined groups organized around ideological principles. By contrast, the PT was a highly disciplined party whose members paid dues, participated in lengthy meetings, and took the party's doctrines very seriously. Much of the PT's success, however, depended on Lula's prestige as a powerful and successful union leader. José Arthur Giannotti and Francisco Weffort were among the many top intellectuals who joined the Workers' Party, and they and others strongly urged Cardoso to j o i n . Despite their entreaties Fernando Henrique decided not to tie his political future to the PT, which he was unconvinced was a realistic vehicle to lead the struggle for democracy in Brazil. In many ways Brazil was an amorphous mass society that was difficult to organize, and Cardoso thought that "a party with a vision of classes, in a society of masses, would not come together." 57

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Cardoso had spent time in Spain during its transition to democracy, and he was impressed with the t r e m e n d o u s mobilization of all kinds of interest groups in Spanish society. Brazil did not have that level of mobilization, and Cardoso thought it was necessary to build on the political organizations t h a t did have roots in the society. Although he sympathized with the aspirations of the PT activists, he t h o u g h t they w e r e i n d u l g i n g in w i s h f u l t h i n k i n g by e x p e c t i n g Brazilians to follow an ideological party. He thought Brazil was more likely to develop o m n i b u s parties, similar to those in t h e U n i t e d States, t h a t u n i t e p e o p l e with diverse interests a n d perspectives. Cardoso also thought the Workers' Party contained a germ of authoritarianism because of its members' tendency to feel that "they were good and everyone else was bad." 5 8

SUCCESSION T O THE SENATE

In 1982 Brazil made a major advance toward democracy when the military permitted free elections at the state level and opposition candidates won the governorships of the key states of Sao Paulo, Rio de Janeiro, and Minas Gerais. These three core states contain 42 percent of Brazil's population and produce 62 percent of its gross domestic product. T h e state of Sao Paulo alone rivals many South American countries in population and economic importance, and the governorship is one of the most powerful positions in the country. In fact, governorships have always been central power positions in Brazil, which is much more loosely federated than the Spanish American countries. T h e PMDB candidate who won the governorship was Cardoso's close associate, Senator F r a n c o M o n t o r o . As M o n t o r o ' s a l t e r n a t e Cardoso assumed his Senate position when he resigned to become governor; Cardoso also continued to work closely with Montoro as an adviser on Sao Paulo state affairs. In Brazil's federal system senators are representatives of their states, and Cardoso was representing the most powerful state in the federation at a time when its government was in opposition to the federal government. Cardoso was well prepared intellectually for his new task. He had written widely on the topic of transition to democracy. Most of his writings a p p e a r e d in newspapers a n d j o u r n a l s , a n d the best were reprinted in a book entitled Perspectivas, edited by his brilliant young adviser, Eduardo Graeff. 59 These writings were widely read, and they helped to define redemocratization as a gradual process of institution building and political negotiation. As always, Cardoso focused on the social forces of a particular historical conjuncture—in this case Brazil in the 1980s. He was well aware that the transition to democracy was

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very different in Eastern Europe, for example. In the Brazilian case the military had not been completely discredited, and it was not about to be forced out of power in disgrace. The military had to be negotiated with, and close attention needed to be paid to ideological divisions among members of the officer corps. It was essential not to provoke the hard-liners within the military but to encourage those who favored gradual democratization. In this negotiation Cardoso and others acted within the framework of Brazilian history and tradition. The Brazilian military has historically claimed a constitutional role as a "moderating power," intervening periodically when it believes civilian governments have gotten out of hand. Many military personnel had reluctantly supported the 1964 coup d'état because they thought the Goulart government was violating the constitution and was acting against the integrity of the armed forces as an institution. Because of his background in a progressive military family, Cardoso knew groups within the military could be convinced to support civilian rule and social reforms if the changes took place in an orderly and nonthreatening way. Many Brazilians were fed up with military rule and would have loved to have rallied the masses to throw the military out of power. In his articles published in the Folha de Sâo Paulo in the early 1980s, Cardoso addressed these issues frankly. He argued that there was no realistic possibility of civilian rule without military consent, and the military would not give its consent unless the opposition demonstrated that it could govern effectively without stirring up social disorder. The left had many opportunities to exercise power on the state and municipal levels, which allowed it to demonstrate to both the military and the Brazilian people how well it could govern. Cardoso recognized the risk that by accepting the limitations imposed by the military, the democratic forces would lose sight of their long-term objectives and become political opportunists seeking office as an end in itself. But if they insisted on the purity of their ideals and refused to participate in an imperfect electoral process, they could lose their best opportunity to move the system toward democracy. The challenge, he thought, was to steer a middle course between opportunism and utopianism. As Cardoso put it, "The fusion between the imperatives of the conjuncture and the long-range horizon of options is what distinguishes opportunism and pure utopianism from a correct policy {verdadeira politico)."60

NOTES

1. "Interview with Mino Carta," 1994, p. 18. 2. Ibid.

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3. Quoted in Sorj, Intelectuais, Autoritarismo e Política, p. 34. 4. Sorj, Intelectuais, Autoritarismo e Política, p. 35. 5. Miceli, "Betting on an Emerging Scientific Community," p. 253. 6. Ibid., p. 309. 7. Soij, Intelectuais, Autoritarismo e Política, p. 44. 8. Reprinted in a revised version in Estudos I (Sào Paulo: CEBRAP, 1971). 9. Cardoso, 1970, '"Teoría da la Dependencia' or Analises Concretas de S i t u a t e s de Dependencia?" p. 127. 10. Ibid., p. 126. 11. Ibid. 12. Ibid., p. 131. 13. Cardoso, 1977, "The Consumption of Dependency Theory in the United States." 14. Cardoso, 1972, "Dependency and Development in Latin America." 15. Cardoso, 1977, "The Consumption of Dependency Theory in the United States." 16. Cardoso, 1972, "Participacáo e Marginalidade: Notas para urna Discusào Teórica." Presented at a symposium on social participation in Latin America, Mexico City, October 1969. 17. Cardoso, 1971, "Comentário Sobre os Conceitos de Superpopulagáo Relativa e Marginalidade." 18. Cardoso, 1972, "La Cidade e a Política: Do Compromiso ao Inconformismo." 19. Cardoso, 1958, "Polarizagào dos Interesses de Patròes e Operários numa Indùstria Paulistina," pp. 213-214. 20. Cardoso, 1959, "Condiciones y Efectos de la Industrialización en Sào Paulo," pp. 577-584. 21. Cardoso, 1960, "Condi^óes Sociais da Industrializado de Sao Paulo;" "A Estrutura da Industria de Sao Paulo, a Partir de 1930," pp. 29-42. 22. Cardoso, 1975, Sào Paulo 1975: Crescimento e Pobreza. Quotes in this book are from the English translation, Sào Paulo: Growth and, Poverty. 23. Ibid., pp. 14-15. 24. Ibid., pp. 54-55. 25. Ibid., p. 65. 26. Ibid., p. 99. 27. Ibid., p. 127. 28. Ibid. 29. Ibid., p. 8. 30. Comments of Maria Isaura Pereira de Queiroz, a sociologist, in the journal Ciencia e Cultura, quoted in Cardoso, 1975, Sào Paulo: Growth and Poverty. 31. Ibid. 32. The arrest is described in "Interview with Miriam Leitáo," 1984. 33. The Rutgers incident is described in Diàrio do Congresso Nacional (June 22, 1988), p. 1813. 34. Ibid., pp. 1812-1813. 35. Cardoso, 1977, Amazonia: Expansào do Capitalismo, p. 107. 36. Ibid. 37. Ibid., p. 187. 38. Cardoso, 1972, "Brasil: El Régimen Política," English version, "Associated-Dependent Development: Theoretical and Practical Implications," pp. 142-178. 39. Ibid., p. 147.

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40. Carlos Roberto Aguiar, Democracia ou Reformas? Alternativas democráticas ä crise política: 1961-1964 (Säo Paulo: Paz e Terra, 1993), p. 23. Available as Ph.D. diss, in English as Political Coalitions in Brazil. 41. Cardoso, O Modelo Político ßrasileiro, p. 65. 42. See Youssef Cohen, Radicals, Reformers and Reactionaries: The Prisoner's Dilemma and the Collapse of Democracy in Latin America (Chicago: University of Chicago Press, 1994) for an analysis of the 1964 coup d'état from the perspective of rational choice and game theory. 43. Kahl, Modernization, Exploitation and Dependency, p. 181. 44. Cardoso, 1974, "Estado e Sociedade: Notas Preliminares," from reprinted version "Estado e Sociedade no Brasil." 45. Cardoso, 1974, "A Questäo da Democracia," in Autoritarismo e Democratizando. 46. Ibid. 47. Author interview with Paul Singer, August 1995. 48. Quotes from Cardoso, 1988, "Dependencia e Democracia," from the English version, "Associated-Dependent Development and Democratic Theory." 49. Cardoso, "Alternativas Políticas na América Latina," in O Modelo Político Brasileiro. 50. These columns are collected in an archive maintained by anthropologist Danielle Ardaillon, who is in charge of Cardoso's personal, pre-presidential papers. 51. Speech to the Brazilian Senate, June 22, 1988, printed in the Diario do Congresso Nacional. 52. Ibid., p. 1814. 53. A Democracia Para Mudar, 1978, p. 44. 54. Ibid., p. 27. 55. Ibid., p. 58. 56. Ibid., p. 59. 57. O Presidente Segundo o Sociólogo, 1988, p. 233. 58. Ibid., p. 230. 59. Perspectivas, 1983. 60. Ibid., p. 17.

Chapter 4

Senator of the Republic, 1983-1992

T H E BRAZILIAN SENATE, LIKE MOST LEGISLATIVE BODIES, MAKES A CEREMO-

nial occasion of each new senator's debut speech in which the senator introduces him/herself and his/her vision for the future. 1 Brazilians enjoy oratory—with its polished vocabulary, literary allusions, and apposite quotations from foreign languages—as an art form. Cardoso was one of Brazil's most prominent intellectuals and a symbol of the burgeoning democratization movement, so his speech was expected to be memorable. Cardoso rose to the occasion, delivering a speech that is still remembered, particularly for his quotations from German sociologist Max Weber. Cardoso recalled that he had been "torn from the classroom and from the country, seized by the whirlwinds of the great political transformations of 1964" and that "once again in 1969 the whims of arbitrary authority undid my illusions of academic routine." He refused to return to exile, dividing his time between Brazil and other countries that generously received his work. Cardoso made the decision to join the Brazilian Democratic Movement "under the pressure and the emotion of a moment in Brazilian History insinuated with the presence of social forces which were still incipient, but which spoke strongly the name of Democracy, qualifying it as desirable to achieve the necessary social reforms." He thanked his political mentors, Ulysses Guimaraes and Franco Montoro, and acknowledged that he was entering the Senate as part of a movement that had inherited the political legacy of "the democratic resistance of the hardest years—the years of torture, of censorship, of exile." The movement had been built by union leaders, artists, intellectuals, religious leaders, and the most dynamic among the business leaders. But it was not yet time for a victory celebration: "I do not debut in this House with the courage which only the certainty of a better tomorrow can bring. It is not given to me to pretend 81

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to open horizons which we can see only faintly, but only to offer criticism, proposals and conciliation." At this point Cardoso quoted the Latin phrase ira et studium (emotion and thought), which he did not define for such a learned audience, stating that these were the prerequisites for politics in the Weberian vision. Apologizing for his pedantry, "a forgivable temptation for someone who is situated between two careers—that of science and that of politics," Cardoso went on to quote from Weber and Goethe, this time in Portuguese translations. In his article "Politics as a Vocation," Max Weber argued that one can often achieve the possible only by a t t e m p t i n g the impossible. In G o e t h e ' s Dr. Faust, Mephistopheles decried the twisted, deceptive nature of a world in which many have sold their souls to the devil. So it has been in Brazil, Cardoso implied, where the struggle has been long, progress has been slow, and many have compromised their ideals. Most of Brazil's senators are lawyers who think in terms of legal and political change. Many of the technocrats who advise them are economists who look primarily at economic indicators. Cardoso brought a sociological perspective that focused on trends in attitudes and behavior. He paid close attention to social movements and to what political scientists call "civil society"—social organizations that are independent of government. As lawyers and politicians, most senators were naturally preoccupied with the upcoming elections and with plans to draft a new constitution. Cardoso acknowledged that these issues were important, but he urged the senators not to lose sight of the importance of involving citizens' groups in their activities. The people had lost faith in the lawyers, economists, and military personnel who had brought unemployment, recession, and misery. They were tired of facile promises; they no longer expected salvation to come from a new leader or a change in government structure. Instead, the entire nation had to participate in the process: The population d e m a n d s a chart, not a helmsman, not another promise, but something they can really believe in. They require law which expresses the collective will, which rejects artifice and casuistry. They will respect Authority, without authoritarianism. They will even be patient with economic discouragement and social despair, as long as there is always truth and some grandeur.

It was not that Cardoso did not vigorously support the movement for direct democratic elections or a new constitution; he certainly did. But Brazil could not wait for a new president or a new legal system to solve its problems. For democracy to work, civil society had to be built from the grassroots—at the neighborhood, community, and

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workplace levels. Of course, Cardoso shared this approach with many activists working in neighborhood and church groups and in local or state government. In many cases this meant accepting a frustratingly slow rate of change. The democracy movement's most central demand was for free, direct election of the president. If the military would not concede that demand, the opposition should at least demand that the military change its policy of prohibiting direct election of the mayors of state capitals and other security areas. The opposition could help its constituents by fighting against tightening salaries under the current Salary Law; it could fight for a more just allocation of revenue among states. At this point Cardoso spoke in his role as senator for the state of Sao Paulo, pointing out that his state paid 45 percent of the federal income tax and received only 8 percent of the revenue. The constitution gave disproportionate weight to smaller states, many of which were also poorer and were dominated by traditional elites. Cardoso argued that there was "a real economic conspiracy to suffocate Sao Paulo," to prevent the state's new opposition government from proving that democratic alternatives can work. If the opposition could not win control of the federal government, at least it could work to change the federal policies that made it difficult or impossible for the new democratic state governments to succeed. Cardoso observed that the military government's policies had led many Brazilians to desperation; they had no jobs or salaries and were suffocating under high interest rates. The opposition had to do what it could to change these policies within the limits of the possible. If progress could be made in solving these problems, Cardoso implied, confidence in the civilian government would grow, and the military might be willing to make further concessions. Thus steps taken to ameliorate the current crisis could make it possible to accomplish what everyone said they longed for, "a great national renegotiation." The current circumstances were forcing "unions and businesses, parties and Armed Forces, electorate and opinion leaders, to put aside their differences and make concessions, each one conceding something, so that we will not have to give up everything tomorrow, to strangers, to authoritarian power, to a new sea of preconceptions and privileges."

SENATE DEBATES

Cardoso's debut speech was well received, although senators from other states quickly reassured him that there was no conspiracy

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against Sao Paulo. As the senator from Sao Paulo, Cardoso was expected to advocate for his constituency. T h e problem was that there were many legitimate claims and inadequate resources to meet them. The danger in a democratic system was that those claims would be met with deficit spending and inflation, a problem Cardoso was not ready to address. As senator, Cardoso spoke on behalf of many interest groups. Most of those speeches simply put the concerns of a constituent group on the record without attempting to find a solution. They offered moral support, as had Cardoso's speeches supporting the democratization movements in Chile and Uruguay. In dealing with difficult issues, such as social security benefits, Cardoso recognized that "the hand which helps is the same hand which causes inflation." 2 T h e s e cases were difficult b e c a u s e they posed a c o n t r a d i c t i o n between two positive ends: paying adequate retirement benefits and maintaining a stable currency. A similar issue was raised with regard to the nation's international debt. Cardoso recognized that it would be disastrous for Brazil to default on its debt; the country would lose its credibility in international credit markets and cut itself off from foreign investment. At the same time, he opposed austerity measures that would cut the incomes of people who could little afford it. Cardoso's approach in these cases was to try to seek a way out of the dilemma rather than articulate a principled position on one side or the other. In the case of the debt crisis, for example, he suggested that perhaps the money could be put into some kind of blocked account to be used for development purposes. Thus the debt would be paid, but the money would not leave the country. Cardoso admitted that he was "a novice [jejuno] in economics" and that this particular solution might not work, but he insisted that some solution must be found. 3 To some, this might seem like wishful thinking. A debt, after all, must be paid, and someone has to pay it. The argument is often over who must suffer. Leftists want the wealthy and the foreign bankers to pay the tab, rightists want to cut government programs, and moderates may prefer to spread the costs evenly. To these advocates it sounded as though Cardoso wanted to have his cake and eat it too. Cardoso, however, argued that "politics is not, as the Americans say, a zero-sum game, in which when one wins the other loses. As long as we think of the problems of the country in terms of 'one wins, the other must lose,' there is no solution." 4 As we will see in Chapter 5, this approach paid off for Cardoso when he tamed Brazil's hyperinflation without imposing austerity, increasing unemployment, or cutting economic growth—at least during the first few years of his administration.

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P e r h a p s t h e m o s t i n t e r e s t i n g d e b a t e in C a r d o s o ' s early s e n a t e years was that with a n o t h e r new senator, R o b e r t o C a m p o s , in many ways Cardoso's alter ego. C a m p o s was b o r n in 1 9 1 7 , h a l f a g e n e r a t i o n b e f o r e Cardoso. Campos's f a t h e r died when C a m p o s was young, a n d h e was raised in h u m b l e c i r c u m s t a n c e s by a widowed m o t h e r in a small town in the Brazilian backlands. B u t in 1 9 3 8 h e passed a highly selective e x a m i n a t i o n to e n t e r the F o r e i g n Ministry, where h e m a d e t h e astute decision to b e c o m e a specialist o n e c o n o m i c policy whereas o t h e r y o u n g diplomats f o c u s e d o n m o r e g l a m o r o u s b u t less critical political o r military matters. C a m p o s e a r n e d a d o c t o r a t e in e c o n o m ics f r o m a U . S . university while p o s t e d to t h e Brazilian embassy in W a s h i n g t o n , D . C . L i k e C a r d o s o , C a m p o s is a b r i l l i a n t essayist a n d m a s t e r o f political p o l e m i c who believes in Brazil's p o t e n t i a l a n d is frustrated by its policy failures. C a m p o s believes that " o n the Brazilian s c e n e , o n e m u s t r e c o g n i z e that my g e n e r a t i o n failed. Having everything it n e e d s to attain greatness, Brazil r e m a i n s stuck in mediocrity. Having everything it n e e d s to b e rich, t h e c o u n t r y houses millions in misery . . . we are late in o u r rendez wows with history." 5 Politically a n d ideologically, C a m p o s a n d Cardoso have b e e n o n o p p o s i t e sides o f t h e f e n c e . W h i l e C a r d o s o was studying M a r x i s m , C a m p o s studied f r e e m a r k e t e c o n o m i c s . S i n c e t h e 1 9 5 0 s , w h e n h e b r o k e with the statist policies o f the K u b i t s c h e k g o v e r n m e n t , C a m p o s — w h o believes in f r e e markets a n d f r e e t r a d e — h a s b e e n the only p r o m i n e n t intellectual in Brazil to consistently advocate " n e o l i b eral" ideas. W h e n the military t o o k power in 1 9 6 4 , Cardoso went into exile, a n d C a m p o s b e c a m e minister o f p l a n n i n g in t h e first military g o v e r n m e n t . H e was vilified by the left, which called h i m " B o b Fields" ( " R o b e r t o C a m p o s " in English) as if h e were an A m e r i c a n in disguise. H e left t h e military g o v e r n m e n t in 1 9 6 8 b e c a u s e it was n o t following his f r e e m a r k e t advice, b u t h e h a d laid m u c h o f the groundwork f o r the Brazilian m i r a c l e o f rapid e c o n o m i c growth. C a m p o s s e e m s m o r e rigid in his views t h a n C a r d o s o . H e is t h e k i n d o f i n t e l l e c t u a l who advocates t h e s a m e basic p h i l o s o p h y year after year in the h o p e that eventually t h e world will r e c o g n i z e that h e has b e e n right all along. Cardoso, by contrast, is o p e n to c h a n g i n g his views to fit new trends. T h i s has worked out well f o r t h e m b o t h , since t h e world has largely c o m e a r o u n d to Campos's p o i n t o f view o n econ o m i c policy, and the Marxism o f Cardoso's youth has g o n e decidedly o u t o f style. As U . S . d i p l o m a t L a w r e n c e H a r r i s o n l a t e r o b s e r v e d : " C a m p o s pressed for e x p a n s i o n o f exports, f o r e i g n investment, fiscal stability, a f r e e r market, a n d decentralization, policies that are b e i n g p u s h e d today by P r e s i d e n t F e r n a n d o H e n r i q u e Cardoso . . . f r o m the v a n t a g e p o i n t o f t h e m i d - 1 9 9 0 s , C a m p o s l o o k s like a c o u r a g e o u s prophet."6

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In his speech to the Brazilian Senate on July 8, 1983, Campos brilliantly anticipated many of the policies Cardoso adopted ten years later. He advocated privatizing state industries, deregulating, ending poverty through economic growth rather than through wage policy, and o p e n i n g up the economy to the world market. Campos urged Brazilians to stop "looking for foreign excuses" by using the International Monetary Fund and multinational corporations as "explanatory devils and scapegoats" to avoid making internal reforms. He particularly w a r n e d against p r o t e c t i n g the growing Brazilian c o m p u t e r industry f r o m foreign competition. Cardoso was not ready to accept these policies. For one thing, he represented interest groups that favored protectionism. The association of data processing workers was holding its first convention in 1983, seeking government regulations to license the profession and protect it f r o m foreign competition. Cardoso supported the group's demands, telling the Senate that "we do not need to import computer programs of any n a t u r e to feed our machines." 7 T h e protectionist side won the debate in 1983. Computer imports were restricted, and U.S. companies were sent packing. Hewlett Packard, which had a computer factory in Campinas, was prohibited f r o m producing the HP3000 in Brazil; the company produced it in Mexico, Canada, and the People's Republic of China instead. Texas Instruments had new equipment packed to send to its factory in Brazil but was prohibited f r o m doing so, so it was shipped to Argentina instead. Motorola was prohibited f r o m opening a semiconductor plant. Taking t h e i r c u e f r o m t h e P e t r o l e u m Is O u r s m o v e m e n t of Cardoso's youth, activists l a u n c h e d an I n f o r m a t i o n Is Ours movement. A monopoly was given to several Brazilian firms, which tried to develop their own technology to do things that could already be done with off-the-shelf technology of the United States, Europe, and Japan. This turned out to be a disastrous mistake. The Brazilian firms could not produce software or hardware equivalent to that available on the world market at competitive prices. Brazilian companies and institutions were b u r d e n e d by having to pay high prices for inferior equipment, which drove u p their costs and made it difficult for them to compete in world markets. In responding to Campos's 1983 speech to the Senate, Cardoso observed that Campos's ideas Have a certain coherence, and for having this coherence, although they are not new—as he himself anticipated in mentioning, with his own special grace, that he would prefer to remain with ancient truths than with new lies—they will find an echo in important sectors of the society. The speech gave everyone the impression that the government perhaps has found a sense of direction: a direction with

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which, certainly, my party is not in agreement, but, in any manner, a determined direction. 8 Cardoso made no real attempt to refute Campos's arguments. He seemed pleased that the government party, for which Campos spoke, had defined a policy. As spokesman for the opposition he could not support the policy, but he would be pleased to see the government implement it in a consistent manner. This reply fit with Cardoso's top priority at the time: to get the democratic system firmly established in Brazil. Although Cardoso's views on a number of important policy issues have changed, his commitment to democracy has been solid throughout his career. A democratic polity requires parties that articulate and carry out policies. Brazil's political parties, by contrast, were often little more than vehicles for dispensing patronage, thus giving voters little to choose from. Cardoso was glad to see signs that the government party was becoming serious about the policy debate. If its policies turned out to be wrong, the voters could choose different leadership. T h e democratic process was more important than the actual policy outcome.

DIRECT ELECTIONS N O W !

In George Orwell's fiction, 1984 was an epoch of totalitarian suffocation. In Brazil, Cardoso believed, the historical clock was moving in the opposite direction. T h e victories in the 1982 state elections gave the opposition movement a tremendous boost, and there were great hopes that the democratic opposition would win the presidency in 1984 and reestablish a truly democratic system. T h e conservative parties, however, h a d won m o s t o f the seats in the S e n a t e a n d the Chamber o f Deputies, and the presidential election system was biased in favor o f the small, conservative, rural states. T h e president was chosen by a complex, indirect voting system, which meant the candidate with the most votes might be defeated by a minority group made up of rural voters and political elites. Cardoso carried great weight in the democratization movement because in addition to being a senator and a leading intellectual, he was the representative o f the newly elected opposition governor of Sao Paulo. Governor Montoro called an organizational meeting of a committee to coordinate opposition movements in the state, including representatives o f political parties, labor unions, and other organizations. Cardoso served as Montoro's spokesman before the committee, which planned a demonstration on January 25 at the Praga de Se in downtown Sao Paulo. T h e t u r n o u t was m u c h g r e a t e r than

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expected, with thousands of people jamming the center of the city. T h e slogan that emerged to unify the opposition movement was Direitas Ja! (Direct Elections Now!), a demand for the right to choose the next president by a straight majority vote. It was a powerful slogan that united all of the opposition elements. After the initial demonstration, there were huge marches in Sao Paulo and Rio de Janeiro, with a quarter to half a million people carrying the Diretas Ja! banner. The government did not attempt to interfere with the demonstrations as it had with student marches in the 1960s and 1970s, since the marchers clearly had the support of the majority of the people in the cities. The atmosphere was more like a street festival than a confrontation with a fascist regime. There were performances by leading artists, speeches by political leaders, and vendors hawking T-shirts and banners. Everyone could sense that change was in the air. The big questions were, who was going to lead that change, and how was it going to come about? There were many opposition parties, some of which were the vehicles of well-known politicians from prior to 1964 who were eager to reclaim their leadership roles. The military was watching the process carefully, wary of losing its credibility with the people but concerned that things might go too far. When the constitutional amendment for direct elections came up for a vote in the Chamber of Deputies, it failed by twenty-two votes, a terrible disappointment. Too many of the deputies had been elected under the old system, and they thought their interests would be better protected if they had a role in indirectly electing they president. Popular support for democratization was so strong, however, that it seemed possible that the opposition could win even under the biased, indirect electoral system. The key was to agree on a strong, united ticket. Cardoso favored putting maximum effort into fighting the election even under the old rules—much to the surprise of the left wing of the PMDB, which wanted to continue to campaign for direct elections. Cardoso responded, "If we want direct elections, we must prepare for the indirect ones. The Electoral College is now an inevitable stage." 9 Fortunately, for once the conservative forces split, and much of the opposition remained united under the banner of the PMDB. The government party nominated Paulo Maluf, a former governor of Sao Paulo with a reputation for engaging in corrupt machine politics. A group of more ideologically motivated leaders split from the government party to form a new Liberal Front Party (PFL). In Brazil the term liberal is used in its European sense to mean a party that favors free markets and a limited role for government. T h e s e liberals formed an alliance with the chief opposition party, the PMDB. The

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ticket included Tancrêdo Neves, the PMDB governor of Minas Gérais, for president and J o s é Sarney o f the liberals for vice president. Neves was an extremely popular senior statesman of the opposition movement. Sarney balanced the ticket by appealing to centrists and principled conservatives. T h e combination offered an air o f progress and change running against an icon of the old order. Cardoso urged the left wing o f the PMDB to support the PMDB-PFL alliance, noting that "the vice president never assumes power in Brazil. This is the tradition." 1 0 T h e support for change was so strong that Neves and Sarney won the election in 1984, even under the old electoral rules. A few months later the constitution was a m e n d e d so future elections would be direct. Brazil's transition to formal democracy had passed its point of no return; the issue now was not whether there would be democracy but what the rules would be. Cardoso thought Brazil could not simply return to the kind o f politics it had before the 1964 coup d'état, with populist leaders who made unrealistic promises they could not implement. Conditions had changed, the society had become more complex, and a more modern government system was needed. T h e political leaders had to work together to build this system, and the intellectuals could help them understand what was needed. On November 12, 1984, as part o f this effort, Cardoso helped to organize a conference in Sâo Paulo on the democratic transition in Brazil. Speakers included p r o m i n e n t politicians such as Governor Franco Montoro and Orestes Quèrcia—one o f Cardoso's opponents in the 1994 presidential election—supported by the PMDB. Cardoso spoke about the role of political parties, noting that ideological parties help to dynamize the political game but are unlikely to win power. T h e c o n f e r e n c e included papers on agrarian reform, labor problems, economic policy, and foreign relations—in short, all o f the policy challenges facing the new government.

LOSING THE SAO PAULO MAYORAL ELECTION

In 1985 Cardoso was chosen to be the PMDB candidate for mayor of the city o f Sao Paulo, a post that would have given him the opportunity to address many of the problems he and his colleagues had studied ten years earlier in Sao Paulo: Growth and Poverty. Cardoso would also have gained administrative e x p e r i e n c e and national p r o m i n e n c e , which might have positioned him to run to succeed Franco Montoro as governor of Sao Paulo. He had, however, a formidable opponent, former Brazilian president J a n i o Quadros. Quadros was a charismatic

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populist who had resigned dramatically from the Brazilian presidency in 1962 because of frustration over congressional refusal to support his programs. His resignation had placed his vice president, J o â o Goulart, in the presidency and led to the 1964 military coup d'état. Many Sào Paulo voters, however, were willing to forgive Quadros for his resignation. Quadros knew how to run a good campaign. His election symbol was a broom, symbolizing his promise to sweep municipal government clean of corruption, to maintain law and order, and to establish a modern, efficient government. In the election Quadros obtained only 38 percent of the vote, compared with Cardoso's respectable 34 percent; the Workers' Party candidate, Eduardo Suplicy, received 20 percent. Clearly, Cardoso would have won if the left-of-center parties had united to support him against Quadros. Cardoso might have won the election even without PT support if he had not blundered when a television interviewer asked him if he believed in God. He was unprepared for the question, which the journalist had promised not to ask, and mumbled something about how it was not a p r o p e r question to ask a candidate for public office. Cardoso did not want to answer questions about whether he had been married in a church or if his children had been baptized. Indeed, it is not customary in Brazil for reporters to pry into candidates' private lives or spiritual beliefs, which are considered none of the public's business. Cardoso is a nominal Catholic, like many Brazilians, but he does not use religious language in his political speaking or writing. In later elections he dealt with the religion issue by stating that given the many mysteries of existence, it made sense to believe in God. In the 1985 election, however, his muffed answer to that question probably cost him the margin of victory.

T H E N E W CONSTITUTION

T h e 1984 presidential election had b e e n a great victory for the democratization movement, but the fates seemed to be conspiring to steal its fruits. President-elect Neves fell terminally ill before he could take the oath of office. This could not have happened at a worse time. Neves was a master politician who was trusted by both the common people and the military rulers, with whom he had reached some informal understanding about the transition. Since Neves was too ill to take office, it was unclear who would take power when he died. Sarney, the vice presidential candidate, had never been sworn into office, so his right to take Neves's place was legally uncertain. Sarney had only recently split from the conservative party that had supported

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the previous regime, and he was in a poor position to lead the democratic resurgence. If Sarney was deemed constitutionally ineligible to take o f f i c e , power would go to the l e a d e r o f the C h a m b e r o f Deputies, Ulysses Guimaraes—a more militant opposition leader who was not acceptable to the military. Putting the interests of Brazil ahead of his personal ambition, Guimaraes agreed to swear Sarney in as acting president. Cardoso recalls that he "was part of the small group of four or five persons who, on that tragic night of President Tancredo Neves' first operation, made the decision with respect to presidential succession." 1 1 The public was led to believe that Neves would recover. When he died five weeks later, Sarney became president and promised to carry on Neves's political agenda. T h e most important commitment was to hold a Constituent Assembly to write a new constitution. At the time, Cardoso was one of the leaders of the left wing of the PMDB, which was particularly skeptical about the Sarney presidency. He followed Guimaraes's leadership in the negotiations about succession. Guimaraes was the party leader and had been Cardoso's political mentor for many years, but Cardoso kept a careful eye on the Sarney government. Sarney appointed the individuals Neves had selected for the key government ministries but found it difficult to work for them. In February 1985 President Sarney announced a cabinet reshuffle that strengthened the PFL and the conservative wing of the PMDB at the expense of the left. Cardoso objected in an interview, complaining that although the opposition had won the election, "who commands nowadays is in fact the moderate wing of the military together with the liberal wing of the old regime and a group o f friends of the president." 12 By this time, however, the public was worried more about the economic situation than about who held various ministries in Brasilia. The economy was fundamentally sound, but it seemed impossible to contain the hyperinflation that distorted so much of the country's e c o n o m i c e f f o r t . With great f a n f a r e Sarney i n t r o d u c e d a new Cruzado Plan prepared by a team of bright young economists recruited by his finance minister. The old currency was replaced with new at a rate of 1,000 to 1, and wages and prices were frozen. In the short term, the plan was highly successful. The public was delighted that the government was doing something about inflation, and with prices frozen, buying power increased. Sarney was so popular that Cardoso had to apologize for the "misunderstandings" in his critical interview. The PMDB made Sarney an honorary president of the party. T h e Cruzado boom lasted just long enough to guarantee the PMDB and PFL politicians a landslide victory in the 1986 congressional elections. The other parties, including the PT on the left and

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the conservative parties, were lucky to hold their own. This election was especially important because the members of Congress and senators elected in 1986 also served as a Constituent Assembly to write the new constitution. 13 The conservatives thought writing the constitution could best be treated as a technical matter to be done by specialists and simply ratified by the Constituent Assembly. This would have resulted in a short document that would have guaranteed basic rights but left most specific policy issues to be settled by Congress in legislation. T h e left favored a participatory process, with as much public involvement as possible. Its proponents wanted as much detail as possible to protect their rights against corrupt or authoritarian politicians in the future. As a leader of the democratization movement, Cardoso had been preaching for years about the importance of civic participation. He was eager to make the process work, and he took on the important role of managing the legal records for the Constituent Assembly, which was chaired by Guimaraes. Cardoso was in charge of the day-to-day work of organizing committees—coordinating their activities, scheduling meetings, and editing reports into a consistent document. He was also in charge of processing the 1,947 amendments that had been submitted by groups from all around the country; many overlapped, and he was able to edit them down to a mere 697 amendments. Cardoso was well suited for this delicate political task; he was well liked and respected, and everyone knew he was interested more in facilitating the democratic process than in advancing the interests of a specific group. The biggest problem was time. Everyone wanted to present concerns, but debate had to be moved along if the Constituent Assembly was ever going to complete its task. Cardoso warned constituents not to repeat the sorry history of the 1823 Constituent Assembly, which spent m o n t h s discussing its rules, r e a c h e d an impasse, and was dissolved by the emperor. T h e 1946 Constituent Assembly had a c o o r d i n a t i n g c o m m i t t e e with t h r e e m e m b e r s ; Cardoso was working with a coordinating committee of forty members from various political parties. One issue that has come up time and again in Brazilian constitutional history and that was debated again in 1987 is whether the country should have a parliamentary or a presidential form of government. Some political scientists believe a parliamentary form would be both more stable and better able to define coherent policies. With a parliamentary system problems such as those that arose with the death of Tancredo Neves could be resolved with a simple party vote. At this point in the debate, however, Cardoso reluctantly concluded that "Brazil does not have the necessary conditions for parliamen-

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tarism, which I consider a superior form of government." 1 4 The parties were n o t strong e n o u g h to make a parliamentary system work well. This was something of a chicken-or-the-egg issue: Parliamentarism would work well only with strong political parties, yet the parties were unlikely to grow strong u n d e r the current presidential system. The new constitution turned out to be something of a hybrid; it provided for both a president and an exceptionally strong Congress. T h e p a r l i a m e n t a r y d e b a t e also b e c a m e c o n f u s e d and b o g g e d down over the length of the presidential term. President Sarney wanted a f i f t h year a d d e d to his t e r m , whereas C a r d o s o a n d the left thought the sooner Brazil could elect a new president by direct vote the better. As the process went on, Cardoso became increasingly frustrated with the constitution-writing process and with Brazilian politics in general. The Cruzado Plan had failed, hyperinflation had returned, and everyone was frustrated. Government expenditures had to be limited, yet the delegates were writing provisions into the constitution that would make that impossible. They sought to give public employees life tenure after two years of employment and to extend that right to the employees of a u t o n o m o u s quasi-governmental corporations such as state-owned oil, steel, and telephone companies. The national oil company, Petrobras, was to be ensured of a p e r m a n e n t national monopoly. The new constitution promised generous retirement benefits to employees in all industries without providing for adequate tax revenues to support those benefits. Many sources of tax revenue were to be taken away from the federal government and reassigned to the states and municipalities, but the federal government's obligations were not to be cut proportionately. Cardoso t h o u g h t the delegates were acting irresponsibly. He warned the delegates that "on economic matters, we must be realistic and sincere. T h e country can no longer support a policy which tries to 'carry water with a sieve' [tapar o sol com uma peneira] ," 15 They were mandating expenditures without imposing the taxes to pay for them. The federal government could always meet its obligations by printing money, but that just made things worse for everyone. The presidency was limited to one four-year term, and the powers of the president were constrained, making it difficult for a future president to correct the problems. On January 29, 1988, Cardoso strode to the Senate podium. He usually spoke from the floor, but he told the senators that he wanted to make some remarks of special importance. He observed that the country was in crisis and that the public blamed the government. It was a crisis of confidence; people no longer believed the government

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knew what it was doing. The country had had four ministers of finance in three years, none of whom had been able to resolve the debt or inflation problems. At this point Senator Joao Menezes asked for the floor to make a side remark. Senators usually grant these apartes as a routine courtesy, but Cardoso really wanted to speak. He said, "I would ask Your Excellency to have understanding. I rarely speak, please listen a little." 16 Senator Menezes insisted, however, and Cardoso conceded to senatorial tradition and yielded the floor. Menezes thought Cardoso was making a "sociological speech," and he wanted to tell Cardoso that he and other senators had said much the same thing earlier when Cardoso was not present. Menezes agreed that "we are going t h r o u g h , really, financial chaos, economic chaos and political chaos." 17 Furthermore, he and the other senators accepted political responsibility for these problems. Cardoso thanked Senator Menezes for his support and continued. He chastised the politicians for fiddling while Rome burned, wasting time in useless bickering. He satirized the factions in the Constituent Assembly meetings by using their nicknames. Let me speak frankly. The Big Center [centráo], the Little Center [centrinho], the political hacks [fisiológicos], the progressives, the historical, the hystericals, the retrogrades and the complainers are, many times, names which disguise the incapacity of the parties to be the mechanisms for exercising the most elemental responsibility of the politician: to respect common sense, the good sense of the man of the streets, without which we will not have representativeness or, for that matter, democracy. 18

Cardoso was frustrated with the process and also with the direction the Constituent Assembly was taking. He thought the body was leading Brazil backward rather than forward. In his view, at this point in history Choosing development implies a process which, for lack of a better name, I will call "modernization," but which in truth is the "globalization" of the economy. In an era when Europe is integrating its market by means of a multiplicity of joint-ventures with the Soviet Union, in which China is "westernizing," Japan is already a part of the "western" world, and the United States is forming a great market in North America, together with Canada and Mexico, Brazil cannot isolate itself, anachronistically, with an outdated policy of autarchy which runs the risk of turning it into a huge Cambodia. 19

If any of the "binary" academic thinkers of the 1970s academic left had heard this speech, they would have been astounded. For them, modernization theory and dependency theory were polar

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opposites, and Cardoso had built his academic reputation as a leading exponent of dependency theory. For Cardoso, as we have seen, dependency was a topic of study rather than a theory, and policies had to change to fit new circumstances. If the left would not welcome Cardoso's views, the right did. Senator Roberto Campos found himself "in the curious position of agreeing with the great part of the conclusions of the senator, without agreeing with his premises." 20 Campos agreed that Brazil needed to integrate itself into the world economy, that there should be a clear separation of functions between the government and private enterprise, and that the government should separate itself from enterprises when doing so best served the public interest. He did not like Cardoso's use of the term social democracy to describe his views since social democracy can be defined in two ways: as social statism or social liberalism. Social statism would support a major role for the state in economic production, whereas social liberalism would leave production to private enterprise with the state specializing in matters such as health and education. Campos was right that in his speech Cardoso was uncertain about the choice between social statism and social liberalism. Cardoso called for converting the state enterprises to "public" enterprises responsive to the public need but not necessarily for their privatization. Although Cardoso continues to call himself a social democrat, he has clearly moved in the direction of privatizing almost all state industries. He has also accepted many o f the o t h e r suggestions Campos and the neoliberals made in 1988, such as ending the legal distinction between companies owned by Brazilian citizens and those legally registered in Brazil but owned by foreigners. The 1988 constitution retained this distinction and reserved certain economic activities for companies owned by Brazilian citizens, but that provision was eliminated in 1995 by a constitutional a m e n d m e n t at President Cardoso's urging. The critical task for Brazil, Cardoso argued, was to integrate itself into the world economy in a way that would assure maximum protection and benefit for its citizens. But that issue was barely discussed in the constitutional debate. Instead, a sterile debate took place between the "social" demands of the left and the "free enterprise" demands of the right. Cardoso was pleased with the provisions of the new constitution that extended social and political rights to citizens and minorities and that ended the right of the military to intervene as a moderating power at times of social conflict. But he thought the constitution was a step backward in the struggle to break down the bureaucratic rigidity that had stifled Brazilian development.

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In a 1988 interview with Veja, a leading news magazine, Cardoso observed The basic principle of the constitution which we are elaborating is the establishment of a welfare state. This is an ancient aspiration of the Brazilians . . . all the developed countries have a welfare state, and it is just that we make a Charter with this concern. The problem is that, thirty years later, the welfare state in the developed countries has become the fiscal crisis state, the state threatening to go into default. What I think is that after the promulgation of the new constitution, we will have to make adjustments, because the Brazilian state entered its fiscal crisis, a state threatening to go into failure, before it began to promote well-being. I am certain that this will not be easy. I am certain that it must be done. 2 1

Seldom have a politician's remarks been more prophetic.

PROBLEMS OF DEMOCRACY

As soon as the constitutional convention was over Cardoso, Mário Covas, and other leaders from the left wing of the PMDB split from the party. This situation is less uncommon in Brazil than in countries with more stable parties, but it was nevertheless a major step for a politician whose entire career had been spent within the PMDB. T h e move was particularly difficult because Cardoso's political mentor, Ulysses Guimaráes, remained in the party. Cardoso explained his reasons for leaving the party in a speech to t h e S e n a t e on J u n e 2 2 , 1 9 8 8 . H e a c k n o w l e d g e d his loyalty to Guimaráes, who would always be "Mr. Direitas" and the patriarch of the 1988 constitution. T h e PMDB, however, had accomplished its f o u n d i n g goals: " D e m o c r a c y is here, with imperfections, but it is h e r e . T h e constitution was written by us." In Cardoso's view the PMDB had been unable to redefine its objectives. O n c e it won power the party became a careerist vehicle for politicians, the "great notary's office whose stamp is indispensable for the exercise of power." He recognized that many people would say "well, that's politics," 22 and so it is for those whose only goal is to hold on to power. But the goal of the progressive forces in the PMDB had always been different—it was politics for change. In Cardoso's view the P M D B had b e c o m e a party o f political hacks {fisiológicos): " T h e traditional patronage culture and with it corruption—both small and large—have been strengthened and modernized." 2 3 Cardoso felt the PMDB had been swallowed up by the traditional Brazilian political culture, which had b e e n s t r e n g t h e n e d

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under the authoritarian regimes. The party could win elections, but in doing so it would be reinforcing the archaic, conservative order. This was a damning indictment, directed especially against party leaders in the state of Sao Paulo. Cardoso quickly stated that he had only friends among the PMDB members in the Senate and that he respected those h o n e s t and dedicated PMDB senators who still believed the party could be saved. He and his colleagues had given up on internal party reform, however, and had decided to form a new party, which they later named the Brazilian Social Democratic Party (PSDB). In remarks to the media, Cardoso was less polite than he had been in his speech on the Senate floor. He told an interviewer from Veja that in some ways the PMDB government was worse than the military regime since "it is indisputable that under the authoritarian regime, we had a spurt of modernization provoked by the state. At least in some ways, things got better. Now we have a state which is clumsy, dumbfounded and whose action is simply pathetic." 2 4 As Cardoso had warned, the new constitution promised a great many benefits without providing the revenue to pay for them; as a consequence, inflation raged out of control. A new finance minister, Luiz Carlos Bresser Pereira, tried a new plan involving another temporary price and wage freeze. Again there was temporary success, but Bresser Pereira could not convince Congress to pass the more fundamental reforms he felt were needed to make the plan work. By the 1990 presidential elections, the country seemed on the verge of economic collapse. T h e Workers' Party had been successful in several important municipal elections, and the leftist Leonel Brizola of the Democratic Workers' Party held the governorship of Rio de Janeiro state. In the presidential elections, however, both he and Lula of the Workers' Party were upstaged by the telegenic young governor of the small northeastern state of Alagoas, Fernando Collor de Mello. Collor was tall, h a n d s o m e , and well-spoken, and he i m p r e s s e d many Brazilians as a modern reformer who could clean up the corrupt system of the past. Collor's ideology was unclear; although he was often denounced as a neoliberal, he was also sometimes called a social democrat. Collor de Mello won the presidential election handily in March 1990 and took power with a clear mandate to wipe the slate clean, particularly with regard to inflation and corruption. He announced policies very similar to those Cardoso announced four years later: privatizing, opening the economy to the world market, ending inflation, and so on. Cardoso was generally supportive of Collor's policy aspirations—much to the dismay of his radical friends in the Workers'

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Party—but he declined to accept a cabinet position in the Collor government because of objections from members of the PSDB. Collor attacked inflation boldly with a radical plan that froze $85 billion in bank accounts, froze prices and wages, and abolished a number of government agencies. Tariffs were cut, and import restrictions were lifted. Brazilians were so desperate for a solution to hyperinflation that they welcomed Collor's plan, even though it meant they could not get their money out of the bank. As Cardoso later recalled, no one had anything bad to say about the plan when it was announced; everyone just hoped and prayed that it would work. At first the plan did seem to be working. Inflation was cut sharply and was kept down for about half a year. In Collor's second year in office, however, prices began to creep up again, and no one knew what to do. A market economy cannot function for any length of time with prices and wages fixed by the government because the essence of a market is that supply and demand vary in response to price signals. At best, a price and wage freeze is a temporary emergency measure to be followed by something else. But Collor had nothing new with which to replace the old system for the longer term. On June 14, 1990, Cardoso entered an article by Julio Mesquita Neto, a journalist with a leading newspaper, the Estado de Sao Paulo, into the Congressional Record. Mesquita Neto was one of the first to state publicly what everyone was thinking: The Collor plan is not working. Businesses are finding ways to get around price controls, people are finding ways to thaw out their frozen funds, and inflation is back. Cardoso warned the Senate: "If the Collor plan doesn't work satisfactorily, there will be terrible consequences for all of us. This is independent of party position. We are watching, at this moment, a kind of army whose generals do not know what is the enemy and who, frequently, choose as enemy that is traditional and most weak: salaries."25 He feared the government would impose a traditional austerity plan, thereby forcing the working class to bear the brunt of the struggle against inflation. Such a plan would not only impose terrible hardship on people who could ill afford it, but past history had showed that it was unlikely to work. Perhaps the Brazilian people could have tolerated a government that honestly tried its best but failed. They could always replace it at the next election. But the Collor government was plagued by rumors of massive corruption, many based on information leaked to the press by members of his own family. And in fact, Collor and his friends were raking in money while the country suffered from their failed policies. Congressional investigators found that Collor's chief cam-

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paign fund-raiser, Paulo César Farias, was stealing hundreds of millions of dollars. The accusations against César Farias came from Collor's younger brother, Pedro Collor, who exposed an elaborate scheme of kickbacks from corporations that wanted privileged access to the Brazilian government. The affair became a soap opera as the family tried unsuccessfully to silence Pedro, having him fired from his j o b and questioning his sanity. But it was soon discovered that Fernando Collor was using funds from César Farias to maintain a lavish Paris apartment and to pay for other luxuries. The two reportedly had a big party to celebrate their first billion dollars of graft. Cardoso, like everyone else, was aghast at the state of the nation. On September 5, 1991, he told the Senate: My anguish is real, and it is not just mine, it is of the Brazilian people . . . in the last few months, the Brazilian crisis has gotten worse. The national anguish has increased, a profound disbelief, which was already common among the masses, has been definitively installed in the elites of the country. There is a clear sense that government is not functioning and that chaos is imminent. 2 6

Fortunately, the Brazilian e s t a b l i s h m e n t r e s p o n d e d to the anguish Cardoso and many others expressed. Under a parliamentary system, Collor de Mello could have been removed with a simple noconfidence vote. Under the presidential system, it was more difficult to r e m o v e him f r o m o f f i c e , b u t he c o u l d c o n s t i t u t i o n a l l y be impeached. Collor's fall was almost as rapid as his rise to power. In March 1992 Collor seemed secure in office and was battling with Congress, by J u l y he was fighting for his political life, and on September 29 the Chamber of Deputies voted decisively to remove him from office. Collor de Mello's conduct had disgraced Brazil, making it appear more like a banana republic than an emerging industrial powerhouse. Voters who had believed in Collor were chagrined and disillusioned, and they were wary of trusting any politician in the future. Even historians, who had a longer perspective on events, were discouraged. Distinguished historian Boris Fausto, writing the concluding remarks for a new history of Brazil that was adopted in university courses all over the country, ended on a despondent note: He wished things could get better, but he could not imagine how.27 The good news was that Collor de Mello was removed from power in an orderly and legal manner. There was a thorough investigation by a congressional committee of inquiry, followed by an open vote in Congress. T h e military left the matter entirely to the civilians to

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resolve, and they handled it responsibly and expeditiously. Many Brazilian presidents had been removed from power by irregular means, but Collor was the first to be removed by an orderly constitutional process. A nation can survive disappointment in a leader if its institutions are sound, and in this sense Brazil was better off than most Brazilians felt at the time.

NOTES

1. Quotes from Cardoso's introductory speech to the Senate are from his "Consideragóes sobre a Situagáo do País: as Razòes da Oposigào," Congresso Nacional, Brasilia, 1983. 2. Diario do Congresso Nacional, May 25, 1984. 3. Diario do Congresso Nacional, September 23, 1983. 4. Diario do Congresso Nacional, June 30, 1991. 5. Campos, A Lanterna na Popa: Memorias, Vol. I, p. 21. 6. Lawrence Harrison, The Pan-American Dream (New York: Basic Books, 1997), pp. 128, 137. 7. Diario do Congresso Nacional, May 20, 1983. 8. Diario do Congresso Nacional, June 9, 1983. 9. Quoted in Dimenstein and de Souza, A Historia Real: Trama de urna Sucessào, p. 25. 10. Ibid. 11. Diario do Congresso Nacional, May 5, 1987. 12. Quoted in Noblat, Ceú dos Favoritos, O Brasil de Sarney a Collor, pp. 48-49. 13. For an account of the constitution-building process, see MartinesLara, Building Democracy in Brazil. 14. Diario do Congresso Nacional, May 5, 1987, p. 596. 15. Diario do Congresso Nacional, March 24, 1997, p. 252. 16. Diario do Congresso Nacional, January 29, 1998, p. 203. 17. Ibid. 18. Ibid., p. 204. 19. Ibid., p. 205. 20. Ibid., p. 211. 21. "Entrevista: Fernando Henrique Cardoso," p. 8. 22. Diario do Congresso Nacional, June 22, 1998, p. 1803. 23. Ibid. 24. "Entrevista: Fernando Henrique Cardoso," pp. 5-8. 25. Diario do Congresso Nacional, June 14, 1998, p. 3100. 26. Diario do Congresso Nacional, September 5, 1991, pp. 5710-5713. 27. Boris Fausto, Historia do Brasil (Sào Paulo: Funda^ào para o Desenvolvimento de Educagào, 1994).

Chapter 5

Taming Inflation and Winning the Presidency, 1992-1994 VICE PRESIDENT ITAMAR FRANCO WAS SWORN IN ON OCTOBER 2 ,

1992,

assuming the presidency of a country that, Cardoso observed, was "saddened because it had been usurped, it had no legitimacy, it had been ruled over in an imperial manner." 1 Franco's only administrative experience had been two terms as mayor of the small city of Juiz de Fora in his home state of Minas Gerais. He had failed in a 1986 campaign for the governorship of Minas Gerais, but he had been elected to the Senate on the ticket of the Party of the Brazilian Democratic Movement. Franco had been chosen by the now disgraced Fernando Collor de Mello to balance his ticket. Despite the limitations of his experience, Franco understood and provided what the country needed: a period of recovery under honest, responsible government. The government's bills were paid, and relations with Congress were cordial and respectful. Most important in Cardoso's view, the specter of corruption had been lifted. There might be occasional lapses, but there was no longer systematic corruption at the highest levels of government. Inflation remained, but no one expected a quick solution from President Franco. As Cardoso observed, "One cannot end inflation with a miracle. When we tried this, it didn't work. It has to be a more persistent process with fewer tricks."2 P r e s i d e n t F r a n c o r e p l a c e d most of Collor de Mello's top appointees and undid Collor's administrative reform by re-creating a number of ministries Collor had abolished. Normalcy had returned, and in keeping with Brazilian tradition Franco's appointees included many of his friends from Juiz de Fora, balanced with a number of f r i e n d s f r o m the Senate. These i n c l u d e d F e r n a n d o H e n r i q u e Cardoso, who was appointed foreign minister. Cardoso had long coveted that position and had considered accepting it in 1991 when Collor met confidentially with him and his 101

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minister of justice, Jarbas Passarinho, to discuss the possibility. Collor had been miffed by Cardoso's previous refusal to join his administration, but the other leaders of Cardoso's political party were strongly against his doing so. It is fortunate that Cardoso's party loyalties had kept him from joining the Collor administration because his reputation would have been tarnished by association. By becoming foreign minister under President Franco, he was helping to restore dignity to the Brazilian government.

THE FOREIGN MINISTRY

After ten years in the Senate, Cardoso found the formality of the Foreign Ministry a bit stifling. He was used to speaking extemporaneously on the Senate floor and exchanging side comments freely with his colleagues. As foreign minister he was expected to deliver carefully worded speeches. He often diverged from this expectation, speaking informally while putting the formal speech into the official record. Cardoso's remarkable linguistic ability facilitated this because he did not need a translator to speak with individuals or groups in English, French, Spanish, or Italian. Within the Foreign Ministry Cardoso instituted a process of strategic planning, encouraging the professionals to rethink Brazilian foreign policy within the new international conjuncture. Cardoso had already thought a great deal about this and had helped to formulate foreign policy as a member of the Senate Committee on Foreign Relations. With the end of the Cold War military issues were much less critical, not just to Brazil but to many countries. What was becoming increasingly important was economics as countries sought to strengthen their position in the world economy. The world was becoming multipolar, which gave Brazil the chance to act more independently than it had in a bipolar world. Brazil was a mjyor economic power, accounting for 60 percent of the economic product in Latin America. In particular, Cardoso thought there were opportunities to expand Brazil's economic ties. South Korea, for example, had investment capital that might come to Brazil. There might also be opportunities in the emerging markets of Eastern Europe. Perhaps most important was the opportunity to build a common market in the Southern Cone of South America—the MERCOSUL, including Brazil, Argentina, Uruguay, Paraguay, and Chile. The Europeans had a common market, and the United States was building one with Mexico and Canada; South America needed to build its own market if it was going to compete in the emerging world system. Cardoso also hoped to strengthen Brazil's role in the UN Security

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Council, although Argentina strongly opposed Brazil's desire for a permanent seat on the council. Brazil's Foreign Ministry is highly professionalized, and the foreign minister is often a career diplomat rather than a politician. The military usually preferred that arrangement since it saw foreign relations as a specialized function requiring technical expertise. As a political leader with extensive ties throughout the country, Cardoso broke with the Foreign Ministry's traditional isolation. His first meeting after taking office was with business leaders from Sao Paulo. This was in keeping with his top priority as foreign minister, which was "to design a foreign policy capable of accelerating the development of the country by utilizing the opportunities offered by the new international scenario." 3

THE CALL FROM THE PRESIDENT

Cardoso thoroughly enjoyed his tenure as foreign minister, and he was far from ready to leave the post after only six months. On May 19, 1993, however, during a visit to New York City, he received a surprise telephone call from President Itamar Franco. 4 The call, which came at 11 on a Thursday evening, caused a cheese soufflé to collapse at the New York residence of the Brazilian ambassador to the United Nations. The ambassador's wife could not object too strenuously when she heard it was an urgent call from the president. Franco informed Cardoso that in a few minutes he was going to ask Finance Minister Eliseu Resende for his resignation. This move was not unexpected because the finance minister is blamed, understandably, whenever inflation is out of control, and the Franco government had proven completely incapable of controlling inflation. Resende had also been the subject of rumors of showing favoritism toward a former employer. Cardoso expressed regret at the need for a change only six months after Collor de Mello's resignation. President Franco then asked, "Would you agree to be minister of finance?" Cardoso wavered, saying he was satisfied at the Foreign Ministry and that he thought it would be better to persuade Resende to remain rather than upset the system with another sign of instability. But he was not in the country, and he did not know the details of the situation. Franco was the president, and the final decision was his. Franco said he would get back to Cardoso as soon as he had talked with Resende. President Franco was totally distraught over the inflation numbers, and there were persistent rumors that he was thinking of resigning. He took Cardoso's response to mean that the latter would accept

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the position of finance minister if formally asked to do so. That was not, however, what Cardoso had told his close political adviser Sérgio Motta, who had alerted Cardoso that he was being considered for the j o b . Motta thought Cardoso should take the position, but Cardoso replied "you're crazy, I'd never take that thing." 5 Another close associate, J o s é Serra, was afraid that if Cardoso accepted the j o b without assurance that he would have the resources necessary to end inflation, he would ruin his own electoral prospects and bring the rest of the Social Democratic Party down with him. Cardoso's wife was hurt to learn that he had accepted the position without telling her, but he told her he had not realized himself that h e h a d a c c e p t e d it. B a s e d o n C a r d o s o ' s polite n o n r e f u s a l , President Franco had ordered that the appointment be published in the Diàrio Oficial. Cardoso was shocked when he learned from friends that the appointment had already been made. He immediately called President F r a n c o to complain. F r a n c o could only say, "The public response has been excellent." 6 Hounded by the Brazilian press corps in New York, Cardoso went back to the ambassador's residence before returning to Brazil. T h e ambassador's wife asked if he really did not believe in God. Cardoso laughed, saying that even when he had been in Tokyo as foreign minister he had gone to church. She offered him a religious pin she had brought with her from Salvador, Bahia, saying it would bring him luck. He asked her to pin it on him, remarking that he would need all the help he could get. Installing Cardoso as finance minister was a tremendous relief for Itamar Franco. He had turned his most difficult problem over to a man of unquestioned integrity and outstanding intellectual ability. Brasilia insiders took this as a sign that instead of retiring, Franco was going to let Cardoso become a kind of acting president for financial affairs. Cardoso was not really expected to solve the inflation problem, which everyone regarded as endemic to the Brazilian system. But it was hoped that he could manage it, bringing inflation down to a level people could live with as they had in the past.

T H E ANTI-INFLATION PLAN

Cardoso hoped to do better than that. He knew that despite the political funk caused by the Collor de Mello affair and the terrible inflation numbers, the underlying Brazilian e c o n o m y was surprisingly sound. After a poor performance in 1992, the economy rebounded in 1993. Overall e c o n o m i c growth was 4.2 percent, led by industrial-

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sector growth of 7.5 percent. There was a $13 billion trade surplus. Inflation was the only economic indicator that was out of control. 7 Inflation had become a way of life in Brazil, and to a surprising extent people had adjusted to it. Bank accounts, tax bills, many salaries, and other contractual payments were indexed, so people's debts and incomes were automatically adjusted to compensate for the declining value of money. This was especially true for the wealthy, who had ready access to money funds and other financial instruments to protect their resources. Much time and energy, however, was wasted on moving money from one place to another to protect its value. Civil servants and private-sector m a n a g e m e n t workers often received salaries adjusted for inflation, although the monetary correction was not always complete. The great mass of people who lived from paycheck to paycheck, however, saw the value of their money decline from day to day. Price changes were erratic, and no one knew what a product or service would cost in two weeks. When people received money, they rushed to spend it as quickly as possible before it lost its value. Because of the elaborate indexing mechanisms maintained by the government, Brazil's hyperinflation did not have the catastrophic short-term consequences it had in Germany in the 1930s. People could live with it from month to month. In the long run, however, indexing was self-defeating because it institutionalized inflationary expectations. Many price and wage increases happened because people anticipated the effects of the indexing system itself. There was the risk that the vicious cycle of inflation would get out of hand and money would lose its value altogether. There is also a psychological cost to living in a hyperinflationary economy. Money gives people a feeling of security and recognition by others, and it symbolizes the power to satisfy one's desires. When money becomes unreliable, people lose a fundamental sense of confidence in the world around them. Brazilian psychoanalyst Joel Birman has argued that "inflation causes a devastating impact which can be seen in the progressive deterioration of the conditions of existence of the great majority of the Brazilian population." 8 What were some of the symptoms of this deterioration of the Brazilian mass psyche? Most important, in Birman's view, was an increase in interpersonal violence, which had become a "basic attribute and trademark of Brazilian life." People felt impunity from social control, death lost its tragic dimension, and a feeling of horror impregnated "the totality of interchange between people." Everyday life presented itself as "a nightmare on the edge of chaos." As a result of this feeling of horror, hopelessness had become the predominant

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mood in Brazil, and cynicism was the predominant ethic. Emigration was viewed as a positive alternative, and people asked themselves whether "Brazil can ever resolve its problems or whether, in fact, the belief that this will be possible has not become a collective dream." 9 Of course, Brazil's problems had many other causes, and Birman may have exaggerated the importance of inflation. Brazil's "culture of brutality," for example, has also been attributed to the history of slavery, the actions of police death squads and torturers during the military regime, the tremendous gap between rich and poor, and other factors. 10 Yet none of these factors affected the daily life of the average Brazilian as regularly and insistently as inflation, and Birman's observations reflect the way many Brazilians felt about inflation, even if their feelings were n o t entirely rational. Brazilian inflation was more than an economic problem; it seemed somehow rooted in the national character. As Birman observed: For many Brazilian economists, the discipline of economics had the technical solutions for the country's inflation. These solutions had circulated for a long time in the symbolic market of ideas in Brazil . . . the obstacles for overcoming inflation were not found essentially in economic techniques, but in other dimensions which regulate human coexistence in the Brazilian social space. 11

A feeling of helplessness toward inflation penetrated the highest ranks of government. In the last days of the Sarney administration in 1990, President Sarney's advisers considered asking him to resign two months before the legal end of his term because they were afraid he lacked the legitimacy needed to control inflation. They feared that such massive inflation might occur that money would lose its value entirely, which would lead to mass unrest and social chaos. The advisers abandoned the idea of resignation, however, fearing that upsetting the constitutional order might be even more disrupting than continued inflation. They held some emergency meetings with business leaders and managed to end Sarney's term with a monthly inflation rate of "only" 80 percent. Adding to the irritation was the fact that other nations had ended severe inflation, including in r e c e n t years Israel a n d Argentina. Cardoso r e f u s e d to believe that Brazil could n o t do what those nations had done. If he had believed Brazil was hopeless as a nation, he could have emigrated to Paris in 1969 and enjoyed the perquisites of a professorship at the Collège de France. He was not about to hide in the Foreign Ministry now that the president of the republic had challenged him to take on the nation's most vexing problem. One thing Brazil did not lack was first-rate economists who had studied the problem in depth. One of the most insightful analyses, by

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Luiz Bresser Pereira and Yoshiaki Nakano, stressed the inertial aspect of Brazilian inflation. 12 This analysis explained how once inflation becomes established, it feeds itself in a vicious cycle. The more prices and wages go up, the more they cause other prices and wages to go up, especially in a society with sensitive indexing mechanisms that compensate for inflation by automatically raising prices and wages. Once this cycle is established it is difficult to stop, even with austerity measures. It grows exponentially until things get out of hand and something has to break. Brazil had reached that point. The question was what to do about it. In their book Bresser Pereira and Nakano suggested using a wage-price freeze as a shock treatment to break the cycle, which seemed to make sense. But Bresser Pereira had tried such a freeze when he was finance minister, and Collor de Mello had tried a much more draconian version. Both attempts had failed because they were only temporary stopgaps, and people would not place their faith in another freeze. Cardoso had to come up with something other than another wage-price freeze. This was not his area of expertise, so he put together a team of the country's brightest economists, most of whom had worked on previous unsuccessful plans. Key members of the team were Edmar Bacha, Pérsio Arida, André Lara Resende, and Gustavo Franco. They were highly qualified, with Ph.D.s in economics from leading world universities and with experience in the struggle against Brazilian inflation. The economists thought they had learned from their past failures, but they were not certain that they could succeed. Bacha was known to remark that "the best we can do is avoid a hyperinflation, if we do that we will have done much." 13 Bacha had been involved in creating President Sarney's Cruzado Plan, and the failure weighed heavily on him. When Sarney took office inflation was 225 percent a year; when he left it was 80 percent a month. Some economists called this hyperinflation, but Bacha feared an inflation so great that people would have to carry bills in suitcases to the market to buy groceries. Bacha refused to accept the position unless he could commute into Brasilia on Tuesdays and leave on Thursdays. This was not an u n c o m m o n practice; many government officials commuted into Brasilia while their families remained in their home cities. Bacha was concerned about his career if he became too closely tied to another failed plan, and he wanted to keep other options open. At the first meeting of the economic advisory team, however, he plunged right in with a proposal that became the core of what became known as the Piano Real. Bacha suggested a temporary dual currency system in which all contracts, including salaries, would be continually readjusted to their value in U.S. dollars. This was not a novel idea; other

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countries such as Argentina had effectively "dollarized" their economies. Another of Cardoso's economic advisers, André Lara Resende, had proposed bimonetarization in an article published at the end of 1992. Bacha, however, proposed a new twist for which he coined the neologism ufirizafào, which referred to basing the currency on the Unidade Fiscal de Referència (UFIRI), one of the indexes the Brazilian government was already using to recalculate taxes. By using this index, which people already understood, change could be implemented quickly. Such use also preserved a degree of national autonomy since prices would not be formally linked to a foreign currency but to a unit the government could adjust if needed. For the time being, however, the new unit was to be pegged to the dollar. When everyone was used to calculating money in this new unit, new currency could be printed that was valued in that unit. Brazil would have a hard currency. Once this plan had been formulated, Cardoso's mood improved; he became less serious and more cheerful. His advisers sensed that he thought they might do more than bring inflation under moderate control and that they might actually slay the dragon of inflation, making Brazil a strong money country. Of course, the new currency would not be a permanent solution unless more fundamental changes followed. The automatic readjustment of prices and wages would have to end. Government spending would have to be brought under control despite the mandates of the 1988 constitution. Without these more fundamental reforms, the new reform would prove only a temporary gimmick because the government would have no choice but to print money to pay its bills. The economists were skeptical, not because they did not think their economic plans could work but because they doubted that Cardoso could mobilize the political clout to implement them. Their pessimism was rooted in years of hard experience. Here Cardoso's acute sensitivity to changes in the political and social climate was critical. He understood why past efforts had failed despite excellent technical advice by the same people who were advising him now, and he thought they could succeed now because of the feeling of desperation within the political establishment. Cardoso thought "it would only be possible to conquer inflation in a moment of political weakness. Only in a moment of political weakness could the minister of finance assume the powers necessary to impose the difficult measures necessary to control inflation." 14 Cardoso's first priority was to sell the public, particularly the political establishment, on the idea that he had a plan that could actually work. Expectations are a key part of the inflationary process,

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and an anti-inflation plan can work only if people believe in it. The public was understandably cynical because so many previous efforts had come to nothing. Often, the plans seemed to work just long enough to guarantee the election or reelection of their sponsors. Cardoso clearly had presidential ambitions, and many thoughtful people—including the top economic advisers in the Workers' Party— believed his plan would be little more than a temporary measure to keep the lid off inflation until after the election. Cardoso understood these doubts, but he insisted that his "plan was always a real plan. It never was a personalist plan, identified with my name." 15 Actually, there was no way to keep the plan from being identified with his name as finance minister, although he always credited the team of economists who drew it up. Cardoso's political f o r t u n e s would inevitably rise or fall with the plan's success or failure. The difficult part was to overcome skepticism that the plan was nothing more than a short-term fix. If Congress would not believe that, it would be impossible to persuade its members to accept the legislation necessary to implement the plan. Here Cardoso's greatest asset was his personal credibility. He knew everybody in the Brazilian political elite, and everyone knew he was honest and serious, as well as highly intelligent and well educated. He was also well liked personally. French writer Brigitte Leoni interviewed over sixty people for her biographical sketch of Cardoso and found no one who disliked him. 16 Even those who disagreed with him on policy issues never questioned his integrity. If Cardoso said he had a good plan, many senators and members of Congress were inclined to give him the benefit of the doubt. If they had questions, he was prepared to answer them because his plan was completely open. Cardoso assured them that there would be no surprise announcements freezing bank accounts, wages, or prices as had occurred under Collor de Mello. In fact, the plan promised to be fairly painless; no one was going to lose financially. After what the country had gone through under Collor de Mello, this program seemed easy and straightforward. In addition to winning support in Congress, Cardoso had to make sure President Franco did not waiver from the plan. Franco was plagued by the same uncertainties that had afflicted his predecessors. From time to time he reportedly told his advisers "you know, I wasn't born glued to this chair. I can leave any time I get a notion." 17 On one occasion in October 1993, an aide interrupted Cardoso and his advisers with a rumor that Franco was going to resign. "My God, my God," was Cardoso's only response. Some bizarre alternative plans were also floating around. For years some leftist members of Congress had advocated voting every-

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one in the country a 100 percent wage increase. Just as Cardoso was preparing his plan Congress actually passed this measure, insisting that doubling wages would not cause inflation since wages were always behind prices anyway. Cardoso had to persuade Franco, who probably would have voted for it if he were still in the Senate, to veto the bill. Franco made no pretense of understanding the economists' arguments; his instinct would have been simply to freeze prices by government fiat. But he understood that a freeze had not worked before and he had given Cardoso responsibility for the Finance Ministry, so he placed his confidence in Cardoso's judgment. One congressman proposed that President Franco and all of the senators and members of Congress should resign simultaneously and that new elections should be held to wipe the slate clean. Franco was reported to be taking the idea seriously. Rumors circulated that Franco was considering a military coup d'état modeled on that of Alberto Fujimori in Peru. Fujimori, with the support of the military, had closed Congress and taken on dictatorial powers. But Fujimori had been elected with tremendous popular support, whereas Franco was the vice presidential choice of a disgraced president. He was also a committed democrat who had no intention of ending Brazil's newly reestablished democracy. For Congress the fundamental problem was that the tax revenues were far from adequate to cover the expenditures to which everyone felt they were entitled. The gap had usually been closed by printing money, which was much easier than raising taxes or cutting spending. This policy had to stop if inflation was to be controlled. The economists estimated that in 1994 the government's expenditures would be U.S.$20 billion in excess of anticipated tax revenue. They suggested that the money needed to cover this gap should be put into a special Emergency Fund at the disposition of the administration. The money would be taken from funds usually earmarked for distribution to the states or for other patronage projects. Congress would abdicate its control over these funds, giving the administration a sort of blank check to do whatever it thought necessary. Cardoso thought he could sell this proposal to Congress, especially since it was an election year. He renamed the fund the Social Emergency Fund and appealed to his former colleagues in the legislature to support the plan as the only hope for ending the scourge of inflation. Cardoso made sure it was understood that any legislator who opposed the fund would be denounced in the upcoming election campaign as an obstructionist who had undermined the government's anti-inflation efforts. Best of all from the legislators' point of view, the plan relieved them of the need to pass substantive reforms

Taming Inflation & Winning the Presidency, 1992—1994 to r a i s e t a x e s o r c u t e x p e n d i t u r e s . T h e r e s p o n s i b i l i t y f o r t h o s e reforms was simply passed on to the next administration. W h e n the constitution was passed in 1988, it contained a provision f o r a constitutional revision p e r i o d in five years, d u r i n g which a m e n d m e n t s could b e passed with only a majority vote. By a great stroke of luck this five-year period coincided with Cardoso's n e e d to pass the Piano Real t h r o u g h Congress. T h e Brazilian constitution also allowed the p r e s i d e n t to pass provisional measures in emergencies, which b e c a m e law without being passed by Congress. These measures lasted only a m o n t h , b u t they could b e renewed indefinitely unless Congress voted to cancel t h e m . In the crisis a t m o s p h e r e caused by the hyperinflation, Congress allowed President Franco to i m p l e m e n t the Social Emergency F u n d as a provisional measure. As Cardoso admitted later, the f u n d was n o t "social" in the sense of providing social services. In fact, it "wasn't even a f u n d . It was simply a mechanism f o r making public f u n d i n g m o r e flexible, f o r m o r e r a t i o n a l use." Congress, in a m o m e n t of d e s p e r a t i o n , simply gave away its f u n d a m e n t a l budgetary powers. This was necessary, Cardoso t h o u g h t , because In Congress, naturally, are rooted the interest groups of the country, and the conjuncture of these vested interests was not favorable to the breaking of inflation. Nor were the bureaucratic interests, because the government itself—as Dr. Bacha said frequently—was married to inflation. The Congressional budgetary process was married to inflation. Only in a moment when the Budgetary Commission was weak and the political forces were unable to organize themselves to stop an audacious economic policy would it be possible to confront inflation.18 T h u s the apostle of democracy decided it was necessary to shortcut the democratic process h e h a d labored f o r decades to build a n d take on himself the responsibility for m a n a g i n g the country's finances. Cardoso did n o t want or n e e d a military c o u p d ' é t a t to d o this, a n d the Brazilian military would n o t have given him one. T h e last t h i n g t h e military wanted was to take o n responsibility f o r t h e inflation issue, which it h a d n o t solved when it was in power. Congress a n d the president were desperate f o r a solution a n d h a d n o idea what else to do, so Cardoso t h o u g h t h e could p e r s u a d e t h e m to p u t the c o u n t r y i n t o a f o r m of receivership with himself as the b a n k r u p t c y judge. Of course, this situation could only be temporary. O n c e the crisis was over, political life would r e t u r n to normal. Some of Cardoso's econ o m i c advisers t h o u g h t it would b e i r r e s p o n s i b l e to i m p l e m e n t a

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monetary reform without first passing reforms to keep the problems from recurring. These reforms would include privatizing inefficient state enterprises, cutting social security benefits, and raising revenues. Without these changes the government would be forced to resort once again to printing money to pay its bills. These changes, however, would be difficult and would take a long time to implement. Cardoso said, "If we wait for the development of ideal conditions, we will never do anything. Inflation is here, in front of us. We ought to do that which is possible."19 Rather than make the reforms before ending inflation, Cardoso's strategy was to end inflation quickly and hope that would generate the political clout necessary to make the reforms. Of course, the reforms would have to be made by the next president, whoever that might be. The Social Emergency Fund would provide the mechanism to keep the government running until lasting changes could be made. Cardoso put his career on the line for the fund, publicly stating that he would leave the government if it was rejected. He also let it slip that he might consider running for president, which made many politicians wary of giving him such an electoral advantage. Behind the scenes Cardoso negotiated with powerful congressional leaders to put together a coalition to support the fund. He was unable to deal with Lula and the Workers' Party, whose members had made it clear that they would not support a plan that did not include major social reforms. Cardoso did win the support of the influential senator from the state of Bahia, Antonio Carlos Magalhaes, a leader of the Liberal Front Party. Magalhaes was thought to have presidential ambitions of his own, but he decided to remain in his safe Senate seat and support Cardoso's plan. This put Cardoso into an alliance with the Liberal Front Party, despite the fact that his Social Democratic Party was bitterly opposed to the Liberal Front Party within Magalhaes' home state of Bahia. Cardoso's strategies were successful. On February 8, 1994, the Social Emergency Fund was passed by Congress, giving Cardoso's ministry control of 18 percent of federal expenditure, or about U.S.$15 billion. Politically, this gave Cardoso national prominence as an alternative to Lula in the forthcoming presidential elections. Everything depended, however, on getting the Piano Real legally enacted and successfully implemented. One week after the Social Emergency Fund was passed, the government was thrown into a foolish minicrisis when President Itamar Franco was photographed holding hands with a beautiful young actress on a podium in the Samba Stadium in Rio de Janeiro. It was during the Carnival celebration, when Brazilians put aside their inhibitions for a week of dancing and revelry. The young lady was caught

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up so much in the spirit of the event that she was wearing a short skirt and no underpants—a fact that was not apparent to the president but that was all too visible to the press, who photographed the young lady's private parts from beneath the podium. Many military officers felt the publication of those photographs so severely compromised the dignity of the presidency that Franco should be removed from office, although it was hardly his responsibility to check the undergarments of young women he met at legitimate public functions. Cardoso was profoundly disturbed that this trivial episode should put Brazil at risk of a coup d'état. Finally, Cardoso h e l p e d to work out a compromise. Franco agreed to dismiss his minister of justice, Mauricio Corrêa—who had displeased the generals—as a token of repentance. Since it was felt to be inappropriate for a military officer to openly dictate policy to the president, Cardoso was asked to be the go-between because the military thought he was dignified and respectable—in contrast to several other senior government officials. President Franco allowed Corrêa to announce that he was leaving so he could run for elective office in Brasilia. Later he changed his mind and remained in office. C a r d o s o o f t e n seems a bit stiff a n d f o r m a l in his public demeanor, which perhaps reflects his upbringing in a military family. He usually dresses formally and resembles a corporate executive. This personal style may have put him at a disadvantage in campaigns against politicians with a more populist manner, but it served him well with the military personnel, as well as with business leaders. His proper demeanor also served him well on those rare occasions when he was caught in what might otherwise have been a compromising situation, such as when he was photographed being kissed by a drag queen at the 1993 Carnival celebration. Fortunately, the celebrant was fully clothed, and Cardoso looked suitably embarrassed in the newspaper photographs. All that remained was the official announcement of the Piano Real, which had to appear in the March 1 Diârio Oficial so it would be in place before the deadline for registering as a candidate for the presidency. As a candidate, Cardoso would have to resign as finance minister. Once the plan was implemented, everyone in the country would be paid his or her salary according to the value of a new currency measure, the Unidade Real de Valor, or the Real Unit of Value. The term real was well chosen; it means both real and royal, and it was a unit of currency under the Portuguese Empire. People were going to be paid in real money. Cardoso's economists wanted to use the average of a wage earner's salary over the preceding four months to compute the new salary, whereas some o t h e r ministers wanted to use the highest salary.

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Cardoso's advisers thought that using the highest salary would lead to an explosion of spending and cause the plan to fail. Cardoso threatened to resign in frustration—abandoning his presidential aspirations—if he did not get his way. Finally, a compromise was worked out, and President Franco signed the decree a few minutes before the Diàrio Oficial went to press on March 1. Cardoso had until April 2 to register his candidacy for the presidency.

WINNING THE PRESIDENCY

In Brazil's multiparty system there are always a large number of candidates for president. The election campaigns usually revolve around prominent personalities, with party affiliation playing a secondary role. In 1994 one personality dominated the scene, the former automobile union leader Luis Inacio "Lula" da Silva. Lula was the candidate of the Workers' Party, an exception to the rule that Brazilian political parties are loosely organized coalitions of political machines loyal to specific politicians. The Workers' Party was a well-disciplined organization whose members paid dues and actively participated in party affairs. Nevertheless, many of its voters were loyal to Lula personally rather than to the party as an organization. Lula had run a strong second to Fernando Collor de Mello in the previous election, and many voters thought Collor de Mello's disgrace proved that Lula had been the better candidate. The polls at the time showed Lula a strong favorite, supported by 29 percent of the voters. Two wellknown politicians, Antonio Britto and Paulo Maluf, each had 16 percent. Despite all the coverage of the Piano Real, Cardoso had only 6 percent. This early lead in the polls did not mean Lula was certain to win, however, because Lula's negative points were as strong as his positive ones. Lula's lead meant the opposition had not yet crystallized around a single candidate. Cardoso asked his adviser, Eduardo Jorge Caldas, to set up a confidential meeting with the director of the Brazilian Institute of Public Opinion, sociologist Carlos Augusto Montenegro. They met secretly in Caldas's apartment because Cardoso did not want to tip off the press about his calculations. Montenegro confirmed that Lula had much opposition as well as support among the public. In his judgment, "Lula's support is inflated. He has been campaigning since 1989, and he won't win the election." In Montenegro's opinion Lula's support would rise little above a third of the electorate. The other two-thirds were looking for someone to carry their banner, and Montenegro's research showed two strong possibilities: Fernando Henrique Cardoso and Antonio Britto.

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Cardoso asked if he would have to form an alliance with the Liberal Front Party to win. Montenegro did not think so: 'You would win with a pure-blooded ticket. The Liberal Front will come along behind." 20 Cardoso was less sure that his relatively weak Social Democratic Party would constitute a sufficient organizational base for a campaign. He commented, "I saw Mario Covas [the Social Democratic candidate] in 1989, and I learned that you don't make a campaign with only the Social Democratic Party. Since the alliance with the Workers' Party didn't work out, we wanted one with the PMDB. It didn't work out with the PMDB because [Orestes] Quèrcia vetoed it, so we made an alliance with the Liberal Front Party." 21 The Liberal Front Party was particularly strong in the impoverished northeast where Cardoso's party was weak. Lula's base of support was solid among convinced leftists, civil servants, and hard-core union voters. The business elite was just as unshakable on the other side, but it had not yet chosen a candidate and was not strongly committed to any party. In between these poles was the great mass of voters with no strong ideological commitment who tended to vote for the candidate that appealed to them or for a political organization that promised them favors. Many of these voters liked Lula because he had honest convictions and was not corrupt. They were concerned, however, that although he was a great union leader, he lacked the education and the experience to be a good president. Brazil is a culture that respects hierarchy and authority. Many Brazilians of humble means do not want their president to be a common person like themselves. They want someone with more education, culture, and experience; someone honest who can be trusted not to rob the country blind, as Collor de Mello and some of the officials of the military governments had done. The leaders of the Social Democratic Party were undecided between Britto and Cardoso. Britto was well respected as the minister of social welfare, but he decided that he wanted to return to his home state of Rio Grande do Sul and run for governor. That left Cardoso as the obvious candidate for the social democrats, and President Franco urged him to run. Cardoso's background as a scholar and a principled opponent of the military dictatorship gave him an image of honesty and integrity that many other candidates lacked. But most important, the Piano Real promised to allow him to run as the candidate who had beaten inflation. This left Paulo Maluf as the strongest competitor to oppose Lula. Maluf, mayor of the city of Sào Paulo, represented the Progressive Reform Party (PPR), a coalition of politicians who had supported the series of military governments. Many other politicians who had sup-

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ported that government were now grouped in the Liberal Front Party, whose most prominent figure was Antonio Carlos Magalhaes, the distinguished senator from the northeastern state of Bahia. Magalhaes knew his Liberal Front Party could not win the election on its own, so he tried to negotiate the best deal he could for a vice presidential nomination in coalition with one of the leading candidates. He began discussions with Cardoso and Maluf to see what could be worked out. Many of Cardoso's leftist friends were aghast that he would even talk with Magalhaes and the Liberal Front Party. These people, after all, had supported the military regime that had driven Cardoso into exile and tortured and killed hundreds of Brazilian progressives. Cardoso had worked with these politicians for years, however, as he helped to negotiate the peaceful transition from a military to a civilian government. Cardoso had lost the governorship of Sao Paulo to Janio Quadros when he refused to accommodate the right-wing political forces in the state. In that election also, the Workers' Party ran against him, drawing off the leftist vote. Cardoso did not want to make the same mistake again. Politics, after all, often makes strange bedfellows. The Workers' Party formed an alliance with the Communist Party of Brazil, which has supported Communist dictatorships in the past and which does not profess unconditional support for political democracy. 22 The Communist Party released a bitter attack accusing Cardoso and President Franco of capitulating to the international financial community, cutting social expenditures, selling away the nation's patrimony through the privatization process, and continuing to use almost two-thirds of the federal budget to repay internal and external debts. The party called on national and democratic forces throughout Brazil to denounce these recessionary policies, which were cloaked in the veil of social democracy. 23 By cementing an alliance with the Liberal Front Party, Cardoso became the clear favorite as a center-right candidate to oppose Lula. Maluf decided not to challenge him, allowing his party to nominate a weaker candidate to head its ticket. Without the link to the liberals, business leaders and other conservatives might have been suspicious of Cardoso's leftist history and academic background. They might have seen him as an idealistic intellectual who would pursue unrealistic schemes. The alliance with the Liberal Front made it clear he was a pragmatic politician who would maintain the stability of the system. If members of the business elite were concerned about Cardoso's leftist past, they could accept a moderate but responsible leftist as necessary to defeat Lula and the Workers' Party—especially since the Workers' Party was now allied with the Communists.

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Having consolidated the center and right-of-center political forces behind his candidacy, Cardoso had to defeat Lula and win the election. Fortunately, Lula and the Workers' Party were overconfident, in part because the polls showed they were so strongly ahead and in part because of the massive response they were receiving at rallies all over the country. Lula ran a people-to-people campaign, traveling all over the country with a caravan of supporters. Everywhere they went, masses of poor people turned out. Lula was a charismatic figure, and many people saw him as a savior who would lead them out of their misery. Lula sometimes got swept up in the enthusiasm, and his rhetoric became more radical. At one rally in a remote Amazonian community, he remarked, "Imagine if Christ came back to earth today . . . what would he have been called? . . . A communist, a communist. . . . It was for this reason that they crucified him. If he were among us today, those who call me a communist would have said the same about him." 24 This kind of rhetoric was inspiring to people on the left, most of whom were already enthusiastic Lula supporters, but it was disturbing to the moderate voters the Workers' Party needed to attract to build its voting base. Many Workers' Party leaders ignored or denied this reality, however. Lula favored an alliance with left-wing elements of the Social Democratic Party who were disillusioned by the alliance with the Liberal Front, but party activists vetoed the idea. Many of them felt victory was certain, so there was no need to build alliances with those on their right. The irony is that although Lula sounded radical on the stump and had agreed to form an alliance with the Communist Party, the Workers' Party platform was actually much more moderate. Unlike many Brazilian leftist fringe parties, the Workers' Party did not advocate socialism. Its platform—passed by the party's National Assembly in 1993—proposed to redistribute wealth, create millions of jobs, and give opportunities to the poor. All of this would create a mass market for consumer goods, which would stimulate industrial development aimed at meeting domestic needs. This platform was very much in keeping with Brazilian political tradition. The greatest Brazilian presidents, particularly Getulio Vargas and Juscelino Kubitschek, had made their mark by expanding the role of the state in building and directing the economy. These presidents had established large state enterprises, including massive steel and petroleum industries, which gave Brazil an industrial base. As a young man, Cardoso had strongly supported these policies, as had his father. These nationalist leaders also built large government educational and social service programs. Many PT supporters worked

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in these industries and government agencies. Indeed, Lula himself had come to prominence as a leader of the Sao Paulo steel industry, which had been built and protected by the government. This platform might have had wide appeal to the Brazilian electorate except for one glaring problem: How would it be paid for? The Brazilian state did not have the tax revenues to pay for massive stateled economic development; it could not even pay for the institutions it already had. As was true everywhere in the world, Brazilian government bureaucracies and state industries were often inefficient. The Brazilian state had paid for them by printing money, which caused tremendous inflation, and no one knew how much of this the system could handle. Inflation was the country's most pressing economic issue, and the Workers' Party simply did not know what to do about it. In a book on Lula and the Workers' Party, two English leftists who are strong supporters of Lula and angry critics of Cardoso's free market policies reached a reluctant conclusion: Notable by its absence [in the Workers' Party program] was any specific reference to the vexed question of hyperinflation . . . the party still had a working-class mentality, born out of decades of wage bargaining, which found it impossible to imagine that a national agreement between employers and the government for eliminating inflation could serve the interests of workers. So the National Meeting demanded, instead, monthly wage increases, failing to see that this would merely feed inflation in a self-defeating spiral. 25

The Workers' Party was weakest precisely where Cardoso was strongest: in fighting inflation. Cardoso had a good, no-nonsense plan without the dramatic but ineffective features, such as price and wage controls and freezing bank accounts, that had offered false hopes in the past. At this point it was still only a plan, prepared by many of the same economists whose previous plans had failed. To assure Cardoso's victory over Lula and the Workers' Party, the plan needed to be successfully implemented before the elections. This might seem like a technical matter that could be left largely to the economists, but the economists were dragging their feet. Having failed before, they wanted to be sure conditions were right before putting their ideas to the test. They asked for privatization of the national oil company, Petrobras, and the largest national mining company, the Companhia Vale do Rio Doce, as preconditions to implementing the plan. The group also wanted ministerial changes to make the government more cohesive. They felt Franco and his ministers were not firmly committed enough to carry off the plan. When Cardoso heard of the economists' objections, he replied "you're crazy." He knew the conditions could not be met in the few

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months remaining before the election. T h e advisers still had doubts. Edmar Bacha argued, "It is as if we were preparing the first trip of a man to the moon. The problem is that we run the risk of pointing the rocket towards the m o o n of economic stabilization, and missing the mars of hyperinflation." Francisco Lopes, an economist who owned a major econometric forecasting firm, opined that "we are facing something entirely new, with uncertain results. It is not like the construction of a bridge or a building, in which the engineer can assure that the concrete will not fall on the heads of the building's occupants. We do not know what may happen." 2 6 Cardoso kept soothing the economists' nerves, assuring t h e m that "everything is fine; we have problems, but we are advancing." 27 Even though he was no longer minister of finance, he kept in close touch with President Franco, making sure his support for the plan did not waiver. T h e group debated the date on which the plan should be implemented—-June 1, July 1, or August 1. August would be too late for the effects to show u p before the election, and J u n e seemed too soon, so they settled on July I. With that date the rate of inflation should be down dramatically before the election. That would mean a tremendous boost in the take-home pay of Brazilian workers, whose paychecks would hold their value f r o m m o n t h to month. T h e Workers' Party played into Cardoso's hands perfectly when it misjudged the Piano Real. O n e of Lula's economic advisers, Paulo Nogueira Batista Junior, warned that the plan "may not last for the rest of our lives, but it is going to lower inflation for a time, lower it almost to zero. It is going to destroy the election." Other PT economists, however, disputed this assessment. In reply to Nogueira Batista Junior's warning, Maria da Conceigao Tavares, who was also a congressional candidate f r o m Rio de Janeiro, said, "Foolishness, foolishness, foolishness. T h e plan is bad, it is a disaster, it will n o t sustain itself until O c t o b e r ; all we have to do is wait f o r the chaos of an i n c o m p e t e n t economic team." Economist Aloizio Mercadente, who had given u p a safe congressional seat to run as Lula's vice presidential candidate, agreed that the Piano Real "is an illusion and we do not need to inconvenience ourselves much about it." 28 Mercadente suggested that the party should d e n o u n c e the plan as an attempt to "freeze the misery," a catchy slogan that appealed to Lula. Lula, who was in the midst of a triumphal tour of the interior with a caravan of supporters, did not attend a July 2 meeting of party leaders to discuss the response to the Piano Real. Following the advice of the majority of his economic advisers, Lula downplayed the import a n c e of C a r d o s o ' s a n t i - i n f l a t i o n p l a n . I n s o m e s p e e c h e s h e d e n o u n c e d the plan as flawed; in others he said it was a good plan b u t t h a t h e c o u l d i m p r o v e o n it. His t r u e e n t h u s i a s m was f o r

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denouncing misery, which struck a responsive chord with his supporters but did little to assuage the doubts of voters, who wanted to know exacdy what he would do if elected. With hindsight, it is clear that Lula and his advisers made a disastrous miscalculation. At the time, however, none of the economists knew exactly what would happen. Cardoso and his supporters were n o t sure what would h a p p e n either, but they knew their hopes depended on making the plan work. Since prices and wages would not be controlled, everything depended on consumer and business confidence. If people thought the plan was working, they would not raise prices or demand higher wages in an attempt to keep up with everyone else. If they thought the plan was failing, prices would creep up, workers would demand compensation, and the spiral would begin anew. With so much dependent on public opinion, Brazil's media establishment went into action. As soon as the plan went into effect, the largest TV network, TV Globo, began a massive publicity blitz about the plan's success. Prices were down, reporters exuded, especially for the market basket of basic commodities that were so important for those on limited incomes. And they were right: Prices were down, and real incomes were up. The working poor were able to buy things they could not afford before. Cardoso's numbers shot up in the polls. By July 25 he and Lula were evenly matched as the two front runners in a multiple candidate field. When voters were asked how they would vote in the second round if Lula and Cardoso were the only choices, Cardoso was the predicted winner. From this point on the election was Cardoso's to lose, and he set about to make sure he did not lose it. Business interests and wealthy individuals provided substantial campaign financing, and Cardoso put together a professional team of campaign managers who conducted focus groups and surveys and prepared television advertisements, much like a U.S. presidential campaign team. They even sought advice from James Carville, one of President Clinton's best-known advisers. But Carville was arrogant and did not get along well with the Brazilian consultants who knew the local situation, and he was soon sent back to the United States. The advisers dealt with questions such as which name Cardoso should use in the campaign literature. He could not call himself F e r n a n d o because that was also F e r n a n d o Collor's first name. Fernando Henrique Cardoso was too long, and research showed that the initials FHC sounded like the name of a medicine. Finally, they settled on Fernando Henrique as the right mix of informality and respectability. The use of first names in referring to public figures is customary in Brazil and does not imply the degree of familiarity it

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might in other countries. On the ballot the leading candidates were identified simply as Fernando Henrique and Lula without last names. Another problem was Fernando Henrique's academic demeanor. In Brazil as everywhere, people suspect that academicians may be better at theorizing than at putting ideas into practice. Cardoso's personal style did not help; he usually dressed formally and spoke as if he were addressing a college lecture hall. His advisers decided that he should loosen up a little, appearing in shirt sleeves in hot weather and sprinkling his remarks with humor. He received a lot of press attention when he casually mentioned that he had "one foot in the kitchen," a colloquial expression referring to mixed racial ancestry. Although Cardoso is usually thought of as white, his mother came from Amazonas and had some Indian ancestry, so the remark was believable. Cardoso was criticized because the phrase is not politically correct, although it expresses a very common sentiment in Brazil where racial lines are not sharply drawn. Cardoso's advisers did not think he should try to imitate Lula's proletarian style or the populist style of many other Brazilian politicians. Rather than implausibly presenting himself as a man of the people, Carville had suggested, Cardoso should offer himself as "the man prepared to solve the problems of the poor." 29 The success of the Piano Real gave the theme substance. Another theme he was advised to stress was his "pride in being a Brazilian." 30 With Cardoso Brazilians would have a president they could all be proud of, one who would bring the country international prestige. Although the campaign made heavy use of marketing research and television advertising, it did not descend into the kinds of negative advertising or personal attacks that have become typical of campaigns in the United States. Brazil's political culture does not cond o n e references to candidates' marital problems, although this informal norm is occasionally violated. 31 Cardoso's advisers were concerned that the PT or other candidates might attack him for incidents in his personal history that are generally known in political circles but are not discussed in the press. His campaign aides reportedly compiled a confidential file on Lula's marital indiscretions in case they needed to reply in kind. Fortunately, this did not become necessary since all of the candidates and the mass media kept the campaign focused on public policy. With personal issues out of the way, the campaign proceeded smoothly as Cardoso's strategists had p l a n n e d it. Lula and the Workers' Party focused on mobilizing their left-wing and workingclass constituencies, instead of building bridges to the more moderate voters. The anti-Lula forces rallied to Cardoso's banner, pushing the other candidates to the sidelines. By the time Lula and his advis-

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ers realized what was happening, it was too late. Two weeks before the election, one of Lula's key advisers confessed: "We can't hide from it any more. This thing of the worker and the party of the worker doesn't work. The Workers' Party is not going to win an election without having a candidate of the middle class."32 Cardoso kept hammering away at his winning theme. He was the knight in shining armor who had slain the invincible dragon of inflation; now he was ready to lead the nation to a brilliant new era of stability and prosperity. He summarized his strategy neatly in an interview with a Brazilian news magazine: In my experience as a campaigner, everything is symbolic. You have to create a myth and tell the same story over and over, repeating who is good and who is bad. In our case, it is the new currency. And what is bad? Inflation! And what is good? Stability! And this is what we did. At every opportunity, I repeated the principal myth. The Real is good, inflation is bad. Whoever is for inflation is bad, whoever is with the Real is good. That was all. 33

On October 3, 1994, Fernando Henrique Cardoso was elected president of Brazil with 54 percent of the vote. Lula received 27 percent, with the rest split among several candidates whose campaigns never took off. Cardoso won every state except Rio Grande do Sul and the Federal District. Surveys showed him leading among all social classes, although he had a stronger margin among wealthier voters. Since Cardoso won more than half of the total vote, a runoff election was not needed. A first-round victory is highly exceptional in Brazil's multiparty elections. In the 1989 election, the Brazilian electorate had been fed up with the ineffectiveness of the establishment. The majority favored the handsome, athletic Fernando Collor de Mello, who promised to end inflation with a single "silver bullet," make a clean sweep of corruption, and purge the "maharajahs" of the bloated bureaucracy. Most of those who did not like Collor de Mello supported other antiestablishment candidates such as Lula of the Worker's Party or Leonel Brizola of the Democratic Labor Party. By 1994 the Collor de Mello debacle had disillusioned many voters. Some who were still angry at the system voted for Lula or for the conservative law-and-order protest candidate, Rio cardiologist Eneas Carneiro. But most were fearful of making another mistake. They played it safe and voted for the establishment candidate—the handpicked choice of retiring President Itamar Franco, a scholar and professor, and the scion of a political family distinguished since the days of the empire who had served responsibly as Senate leader, foreign minister, and finance minister. Cardoso and his Sao Paulo tech-

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nocrats were n o t likely to embarrass and rip off the country as Collor de Mello a n d his n o r t h e a s t e r n r e t i n u e had d o n e . Most important, Cardoso actually seemed to know what he was doing. H e had tamed inflation, and he had the education and e x p e r i e n c e to run a large, c o m p l e x country. Brazil h a d finally f o u n d a p r e s i d e n t who c o u l d deliver on his promises.

NOTES

1. Cardoso, 1994, Politico. Externa em Tempos de Mudanfa, from a 199S interview with the Jornal do Brasil, p. 283. 2. Ibid., p. 282. 3. Ibid., p. 16. 4. This account is based largely on Dimenstein and de Souza, A Historia Real: Trama de uma Sucessao. 5. Ibid., p. 27. 6. Ibid., p. 28. 7. These economic numbers are from Ronald M. Schneider, Brazil: Culture and Politics in a New Industrial Powerhouse (Boulder: Westview, 1996), pp. 162-163. 8. J o e l Birman, "Sujeito, Valor, e Divida Simbolica: Notas Introductorias Sobre o Dinheiro na Metapsicologia Freudiana," in Na Corda Bamba: Doze Estudos Sobre a Cultura da Inflagao (Rio de Janeiro: Relume Dumara, 1993), p. 139. 9. Ibid., pp. 140-142. 10. See the discussion and references in Joseph Page, The Brazilians (Reading, Mass: Addison-Wesley, 1995), chapter 9. 11. Birman, "Sujeito, Valor, e Divida Simbolica: Notas Introductorias Sobre o Dinheiro na Metapsicologia Freudiana," p. 140. 12. Luiz Bresser Pereira and Yoshiaki Nakano, The Theory of Inertial Inflation (Boulder: Lynne Reinner, 1987). 13. Dimenstein and de Souza, A Historia Real: Trama de uma Sucessao, p. 94. 14. Cardoso, 1997, "Posfacio," p. 246. 15. Cardoso, 1995, "Preface," p. 9. 16. Leoni, in Portuguese, Fernando Henrique Cardoso: O Brasil do Possivel. 17. Dimenstein and de Souza, A Historia Real: Trama de uma Sucessao, p. 109. 18. Cardoso, 1997, "Posfacio," p. 246. 19. Dimenstein and de Souza, A Historia Real: Trama de uma Sucessao, p. 124. 20. Veja, October 12, 1994, p. 27. 21. Quoted in Suassuna and Novaes, Como Fernando Henrique foi Eleito Presidente, pp. 20-21. 22. Folha de Sao Paulo, May 8, 1994. 23. Classe Operaria, July 5-18, 1993. 24. Quoted in Branford and Kucinski, Brazil: Carnival of the Oppressed; Lula and the Brazilian Workers' Party, p. 67. 25. Ibid., pp. 65-66. 26. Dimenstein and de Souza, A Historia Real: Trama de uma Sucessao, pp. 202, 204.

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27. Ibid., p. 203. 28. Quotes from Veja, October 12, 1994, pp. 65-66. 29. Veja, October 12,1996, p. 33. 30. Filho, Nos Bastidores da Campanha: Cronica de urna Vitoria, p. 84. 31. For example, Màrcio Chaer, "O Plano FHC," p. 62; and Dimenstein and de Souza, A História Real: Trama de urna Sucessào, p. 93. Since these rumors did not become part of the public debate, I decided to respect Brazilian norms and not repeat them in this book. 32. Veja, October 12, 1994, p. 65. 33. Interview with Isto E, reprinted in Suassuna and Novaes, Como Fernando Henrique foi Eleito Presidente, p. 64.

Chapter 6

The Intellectual in Power, 1994-1998

CARDOSO'S INAUGURATION WAS SCHEDULED FOR NEW YEAR'S DAY, 1 9 9 5 —

the height of the Brazilian summer vacation season—at the national capital of Brasilia. 1 Brasilia is a planned city, built in the center of the country in the 1950s, with futuristic buildings, spacious avenues, and planned neighborhoods. It is distant f r o m Brazil's major cities, which d e v e l o p e d along the Atlantic coast to serve the e x p o r t economy. Although foreigners often assume that Brasilia is in the Amazon j u n gle, it is actually in the vast planalto, or high plains country, which resembles the dry grasslands of the American Midwest. Brasilia was intended to spur development in the interior of Brazil, but it served mosdy to drive up the cost of government. Cardoso thought Brasilia, with its "monumental nature as a city for celebrating power, such as those constructed by the Aztecs," symbolized the Iberian cultural tradition that holds that man can intentionally i n t e r v e n e in the c o u r s e of history. 2 T h e P r a ç a dos Très Poderes, or Plaza of the Three Powers, is the centerpiece of the city f r o m which broad grassy avenues spread out to designated shopping, residential, hotel, and recreational areas. T h e Praça is n a m e d after the three branches of the federal government that are located there: the Presidency, the Supreme Court, and the Congress. Nearby is the Foreign Ministry with its lovely courtyard. T h e city was designed by three of the country's most renowned urban designers: planner Lucio Costa, architect Oscar Neimeyer, and landscape architect Burle Marx. Neimeyer let his imagination flow freely: "I sought the curved and sensual line. T h e curve that I see in the Brazilian hills, in the body of a loved one, in the clouds in the sky and in the ocean waves."3 His sensuous buildings are ideally placed on a gentle bluff with views of nearby lakes and the surrounding plains. Cardoso spent many fulfilling years on the Praça as senator and foreign minister, a n d now h e was poised to achieve the d r e a m of

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every Brazilian politician by moving into the Palâcio do Planalto, the Palace of the High Plains. Cardoso wanted his inauguration to be more than a changing of the guard; he wanted it to symbolize a turning point in Brazilian history. In the past Brazilians had believed government should guide society. The will to make history was "almost a monopoly, a privilege of government, of the State, which we always spell with a capital 'S' to show reverence for those who hold the divine power (manâ) to make things happen." In this venerable cultural tradition, the power to shape the future is "outside the realm of civil society."4 Cardoso wanted to break down the barrier between government and civil society, so he decided to kick off the inauguration festivities with a massive popular concert on the Praça. He chose the sensational Bahian singer Daniela Mercury and a chorinho band as the major attractions. The celebration was more reminiscent of Independence Day on the mall in Washington, D.C., than of a European coronation. Retiring President Itamar Franco was a bachelor, so Brasilia had not had a first lady for two years. President Collor de Mello's wife, Rosane Collor, was a pretty, bubbly young woman who loved to go to glamorous parties and on shopping trips to Paris. Ruth Cardoso, by contrast, was an accomplished scholar and teacher, a mature and sensible woman who favored short hair and tasteful business clothing. The fashion industry decided it was time for a change. The owner of one of the country's best-known boutiques announced, "Dresses will be more classic . . . closer to Dior and Valentino and farther from Lacroix. The perna style is over."5 (A perna, literally a "female duck," is slang for a woman who loves to show off ostentatious clothing and jewelry.) Twenty thousand people filled the Praça dos Très Poderes for the inauguration festivities, and Fernando Henrique and Ruth Cardoso hosted a dinner for 5,000 invited guests. Cardoso retained the tradition of the dinner and asked that the men wear tuxedos and the women long dresses. He wore the tailor-made tuxedo he had worn at the Americas Summit in Miami. The Cardosos ignored the tradition of seating the presidential party at a head table in favor of a buffet that allowed them to circulate among the guests. Cardoso also attended an ecumenical religious ceremony at the Cathedral of Brasilia, something many of his predecessors had skipped. Once the festivities were over, Cardoso was free to move into the beautiful president's office on the second floor of the Palâcio do Planalto. Although it is called a palace, the Planalto is actually a modern two-story office building with picture windows comfortably recessed to shade them from the high plains sun. The president's corner office, spacious and furnished with comfortable leather chairs

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and couches and natural wooden tables, has lovely shaded views of nearby trees and distant hills. Retiring President Itamar Franco greeted Cardoso as the former removed his personal pictures and belongings f r o m the office. Franco had some difficulty removing a wooden crucifix that was firmly fastened to the wall. It had been a gift f r o m a friend of Franco's, but Cardoso asked him to leave it, saying "it would be better that way." He did not need any stories in the press about crucifixes being removed f r o m the president's office. Cardoso was elected with an exceptionally strong and clear mandate. The Brazilian people wanted three things from his administration: a stable currency, a growing standard of living, and an honest government. Successful nations everywhere offer their citizens these fundamentals, and Brazilians were ready to take their place a m o n g the ranks of those nations. Fernando Collor de Mello had been given the same mandate, but he had gone down in a blaze of scandal as inflation spiraled out of control. The old joke "Brazil is the land of the future and always will be," was no longer funny. Despite the pessimism of many of his countrymen, Cardoso was convinced that the country was ready to p u t aside the self-defeating practices of the past.

ECONOMIC OPPORTUNITIES

Brazil is one of the Third World's industrial powerhouses, with a larger steel industry than France or the United Kingdom and huge automobile, electronics, petrochemical, shoe, clothing, paper, agricultural, mining, and shipbuilding industries. This industrial strength had been obscured in many investors' minds by the weakness of the financial and budgetary systems. Cardoso believed that the economy would prosper if inflation and government spending could be kept u n d e r control and key industries could be privatized. Cardoso had the good fortune of taking control of the country after it had begun to recover f r o m a cyclical downturn. T h e Brazilian economy grew 4.2 percent in 1993, 6.0 percent in 1994, 4.1 percent in 1995, and 3.5 percent in 1996, and it was projected to increase to a b o u t 4.5 p e r c e n t in 1997 and 1998. 6 A book by University of Sao Paulo business professor Stephen Kanitz, Brazil Makes Good: The New Cycle of Growth 1995-2005 [O Brasil Que Da Certo: O Novo Ciclo de Crescimento 1995-2005], became an instant best-seller when it was published in 1994. The book's title challenged the feeling that Brazil was a country where nothing ever quite worked out. Kanitz argued that previous anti-inflation plans had failed for technical reasons and not for a lack of political will. Now that the bear of inflation was off the

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nation's back, Kanitz argued, Brazil was poised for a new surge of economic growth. Kanitz presented data showing that, when compared to other countries, Brazil was well situated on a number of key indicators that international investors use when evaluating countries: The national debt was comparatively low, about 30 percent of gross national product, compared to 50 percent in the United States. The government's international hard currency reserves were high. Government spending was only 22 percent of gross national product, as compared to 40 percent in the United States and over 50 percent in France, Italy, Denmark, or Sweden. Public sector employees were only about 5 percent of the labor force, slightly less than in Japan and considerably lower than in the United States (14 percent) or Denmark and Sweden (30 percent). Military spending was under 1 percent of gross national product.7 The potential for economic growth was certainly present and Cardoso and his advisers believed the best way to to bring about economic growth was to privatize state industries, cut regulations, and bring in as much foreign investment as possible. This meant convincing foreign and Brazilian investors to invest large sums of money in Brazil rather than in other countries that were eager to welcome the same investors. The way to attract capital investment was to provide a stable currency, a good investment climate, and the infrastructure needed for a rapidly growing economy. Although there were technical problems in implementing this policy, the government had a fine cadre of economists who could manage them. The real obstacles were political. Cardoso's critics on the left, such as his old friend Paul Singer, complained that "all the reforms which he is implementing are those which all over the world the right is implementing. There is no difference." 8 But not just the "right" was following these policies; they were being followed by governments of all ideological stripes. In the 1990s economists reached a substantial consensus about economic policy that was articulated by institutions such as the World Bank. Opponents sometimes refer to it as the "Washington consensus," as if there were something sinister and conspiratorial about it. But the same fundamental policies were adopted in Beijing, New Delhi, Buenos Aires, Moscow, Santiago, and Mexico City—not because of a conspiracy but because leaders and their advisers reached similar conclusions based on a similar interpretation of recent history. Cardoso agreed with this policy consensus, at least at that point in Brazil's history. Indeed, the World Bank's World Development Report 1997 sounds very much like Cardoso's platform for Brazil in 1994. The policy meant wholeheartedly accepting the fact that Brazil's fore-

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seeable future was as a capitalist country with a market economy and doing whatever was necessary to make Brazilian capitalism succeed. The strategy was highly successful for the first few years of Cardoso's presidency. Most important, monthly inflation rates had reached 45 percent in March and April 1994 but dropped dramatically to 1.75 percent in June 1994. Month after month, Brazil reported monthly inflation rates under 3 percent, often even under 1 percent. For the first time in 35 years the annual inflation figures were in the vicinity of 20 percent to 25 percent in 1994 and 1995, 10 percent in 1996, 4.5 percent in 1997, and down almost to zero in some months in 1998. 9 This monetary stability was a tremendous boon to the people of Brazil. Those who lived from paycheck to paycheck could count on their cash holding its value while they shopped for the best prices. For the first time in Brazilian history the market basket of basic commodities Brazilian statisticians use to measure the cost of living could be purchased by someone who earned the minimum wage. Average per capita incomes went up approximately 30 percent, and consumption of basic foodstuffs and other necessities increased markedly. Much of the economic growth was possible because the international environment was favorable. Emerging markets funds were popular in New York and other financial centers, and investment flowed into the country. The private savings of many Brazilians who had held billions of U.S. dollars in reserve during the periods of high inflation returned to the economy. Cardoso traveled to New York, Europe, and Japan speaking confidently to business and government leaders. Some Brazilians felt neglected because their president was spending so much time out of the country, but they were proud to have a leader who was so impressive on the world stage. They were delighted to be part of a growing economy again. Economics has often been called the dismal science because it exhorts us to work hard, pay our debts, and invest for the future— putting off pleasure for another day. Conservatives often point out that "there's no such thing as a free lunch" and oppose government handouts because someone will have to pay for them. Leftists implicitly accept this argument when they assume that the only way to raise the living standards of the poor is to redistribute income from the well-to-do. In the past Brazil and many other countries accepted this zerosum philosophy when they adopted austerity plans favored by the International Monetary Fund and other world financial institutions to pay off their debts. The difficulty with these plans, as world leaders came to recognize, was that they imposed suffering on the poor and working classes—which could ill afford it—and led to political unrest

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that eventually caused them to fail. The Piano Real avoided this trap by making everyone a winner. It seemed too good to be true. And t h a t is what e c o n o m i s t R u d i g e r D o r n b u s c h of the Massachusetts Institute of Technology said in an article titled "Brazil Has Run Out of Excuses," published in Business Week on J u n e 10, 1996.10 Dornbusch said, "The stabilization of Brazil's inflation is less of a miracle than the government claims. In most other countries, a major effort in fiscal discipline is part of an anti-inflation strategy. Not in Brazil. Instead, Brazil overvalued its currency and sharply raised its high real interest rates." T h e Brazilian news magazine Veja called D o r n b u s c h "the Unabomber of the Real" because his remarks undermined investor confidence by claiming that Brazil's success might be temporary. If Brazil did not get government spending under control, Dornbusch warned, its economy might crash as Mexico's had a few months before. Dornbusch repeated his remarks at a conference in Australia, and they were picked up by the Wall Street Journal and other media that have great influence in the investment community. The Brazilian stock market shuddered, falling 2 percent in response to Dornbusch's remarks, and the resale value of Brazil's foreign bonds fell by 1 percent. Brazilian economists were outraged. Gustavo Franco fumed, "A person who devotes two hours a week to Brazil is in no position to sustain a discussion." Former minister Mailson de Nobrega called Dornbusch a "cretin," and others denounced him as irresponsible, opportunistic, and crazy. Economist Arminio Fraga called Dornbusch "delirious," but he thought his remarks might be helpful because "Brazilians have a culture of accommodation, and we need to be warned once in a while."11 The economists were outraged mostly by Dornbusch's inflammatory tone, which threatened to set off a panic. Dornbusch's basic point, however, was less controversial. All of the economists knew the Piano Real was a transitional measure—The Economist called it a "fiddle"—that had to be followed by lasting reforms. 1 2 The reforms Dornbusch wanted were the same ones Cardoso had promised: balancing the budget, privatizing state industries, reforming social security, and reducing ineffective bureaucracy. In Dornbusch's view Cardoso was going too slowly, backing away from reforms when they became "politically difficult." D o r n b u s c h lectured: "President Cardoso has a special responsibility. He is immensely popular. He is an accomplished communicator and a superior intellect. He can make Brazil take the medicine and set it on the right path—or he can do nothing and be another leader who failed to take responsibility for Brazil never taking its rightful place on the world stage." 13

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What made Dornbusch believe he was qualified to advise Cardoso on Brazilian politics? If Dornbusch spent two hours a month studying Brazilian e c o n o m i c s , he undoubtedly spent a good deal less on Brazilian politics. Cardoso had been elected to a presidency with constitutionally limited powers in a nation deeply committed to its renewed democratic institutions. Brazil was not Peru, where President Alberto Fujimori had won widespread support when he shut down Congress and assumed dictatorial powers. Cardoso was not about to abandon his lifelong commitment to democracy because a U.S. economist was impatient. At least for the short term, Cardoso and his economists were corr e c t . Brazil w e a t h e r e d the M e x i c a n c o l l a p s e a n d D o r n b u s c h ' s r e p r o a c h and c o n t i n u e d to p r o s p e r as inflation d e c l i n e d . And Cardoso was making real progress on the reforms, although not as quickly as he or his critics would have liked.

PRIVATIZATION

Perhaps the greatest success story was the privatization program because the legal groundwork and administrative mechanisms for privatization were already established. Privatization had begun in the 1980s, but it had been limited to smaller companies that had gone bankrupt and been absorbed by the state. 14 The Collor de Mello government extended privatization to core industries such as steel, petrochemicals, and fertilizer. T h e s e had previously been considered strategic industries that should be state owned, even by the antiCommunist military governments of the 1970s. Collor de Mello's policy continued under the Franco and Cardoso administrations. In 1994 alone, privatization generated receipts of over $2 billion, 72 percent of which were in cash. The money was used to pay off short-term government debts. T h e Cardoso administration also expanded privatization by including public utility companies, railways, and banks. Privatization in Brazil was part of a global trend away from state ownership of industry. Government industries had helped to start the industrialization process in Brazil at a time when private capital was very limited, and the nationalist left continued to support state ownership of key industries. Experience over the past few years, however, seemed to show that turning state industries over to private investors was a winning proposition for all involved. Selling the industries brought money to the government, productivity and employment increased, and the new privately owned industries paid taxes. For example, over a forty-year period from 1945 to 1985 the Brazilian government had invested $26.1 billion in steel mills, receiv-

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ing in return dividend payments of only $600 million. Between 1991 and 1993, eight steel companies were privatized. Companies that had been losing money for years were turned around remarkably quickly and posted $150 million in profits by 1993. In addition, the government received $5.5 billion for its shares in the companies, whereas the new investors assumed $2.5 billion in debt owed by the state firms. Employment increased, and the opportunity for stock ownership was extended to the workers. T h e revenues such privatization brought in helped to pay the government's bills instead of draining the treasury and causing inflationary pressures. 15

THE O I L WORKERS' STRIKE

Cardoso also took on o n e o f Brazil's greatest sacred cows, the Petrobras oil monopoly. At first, Cardoso did not raise the issue of privatizing Petrobras, a $100 billion industry that was part of Brazil's national identity. T h e goal was simply to open up the country's oil industry to c o m p e t i t i o n from foreign firms, which would f o r c e Petrobras to be more efficient and perhaps increase total oil production so Brazil could become more self-sufficient. T h e r e were two m a j o r p r o b l e m s with this p l a n . First, the Petrobras monopoly had been locked into the 1988 constitution; abolishing it would require a constitutional amendment. Second and more urgent was the strong opposition of Petrobras workers, who were organized under the banner of the national labor federation. This federation, which had strongly supported Lula's candidacy, was the strongest base of organized opposition to the Cardoso government. T h e leftist labor leaders were determined to take a stand in defense of Brazil's state-owned industries and against the "neoliberal" privatization movement. As employees of a national monopoly corporation that controlled an essential product, the oil workers seemed in a strong position for a strike. They would be striking, however, not over wages or working conditions but in an attempt to influence national policy. Thus the public reaction would be crucial, and it was not clear how sympathetic the public would be since oil workers were very well paid. It also was not clear that even an effective strike would cripple the economy because the Petrobras monopoly did not extend to the distribution and retail sales of oil products. Here foreign firms were allowed to compete because domestic production was insufficient to meet the nation's needs. Cardoso knew an oil workers' strike was in the works and was not surprised when, on April 26, 1995, Minister o f Energy and Mines

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Raimundo Britto informed him that a strike seemed imminent. "In a strike in a state-owned corporation, it is like this," Cardoso said. "If we appear weak at the beginning, we will never recover. They will suck up everything." He was determined to win the confrontation with the oil workers but without "going beyond the law, or above it." 16 Within the confines of the law, the Cardoso administration organized a plan to defeat the oil workers. The first step was to pump as much oil as possible to the independent distributors—especially in the interior of the country—thereby opening space in the tanks in the port cities to receive more imported oil when needed. Companies could take this oil on consignment and not pay for it until it was sold. The next step was to prepare a legal brief for the Supreme Labor Tribunal, which would rule on the legality of a strike. It seemed certain that a political strike in a state monopoly corporation would be ruled illegal, but Minister of the Supreme Labor Tribunal Emil Pasarato was concerned that Cardoso would follow Itamar Franco's precedent in similar cases and agree to a compromise. He checked with Minister of Planning José Serra, who had control of state corporations and was one of Cardoso's closest advisers. Cardoso assured Serra that he was not going to cave in. Serra assured Britto that as soon as the tribunal declared the strike illegal the government could take action against the strikers. Britto made a list of union activists thought likely to take terrorist actions against the refineries. Meanwhile, Serra asked Justice Minister Nelson Jobim for a ruling on whether the constitution would allow the government to use army troops to occupy refineries and to allow replacement workers to substitute for strikers. Jobim said army troops could stay in the buildings and on the grounds of the refineries, which were national property, but that the military police—which had civilian police powers— would have to patrol outside. Under the constitution temporary workers could be hired for up to four years. The next step was to make a list of oil industry retirees, including retired workers from private firms. Arrangements were made with 220 retired workers and petrochemists, who were surreptitiously brought into the refineries before the strike so they would know the equipment they had to work with. Contracts were signed with ESSO and Texaco in the United States and Shell in England to ensure a supply of imported oil. When the workers went on strike as expected at the beginning of May 1995, the government was ready. Army troops occupied key refineries to protect them from sabotage and to guarantee the rights of those disposed to work, including the retired substitute workers. There were long lines at some gas stations, but they resulted from panic rather than a shortage of fuel. Public opinion polls showed a

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lopsided majority supported the government, and the strike collapsed within a month. The workers returned to their jobs; they had lost a month's pay and obtained nothing significant in return. This was a decisive action for a leader who had begun his career as a Marxist and a labor sympathizer. As recently as 1988 Cardoso had stood out among the political leaders who denounced military intervention in a strike at the Volta Redonda steel mill. When asked about the apparent change in his views, Cardoso pointed out that the Volta Redonda strike had not been declared illegal and insisted, "I am complying with the Constitution." 17 Cardoso was indeed careful to act within the constitution, but doing so gave him o t h e r options. The constitution would have allowed him to negotiate a compromise, as Itamar Franco had done in similar situations. But this strike was a challenge to Cardoso's authority and policy objectives by political forces that had lost the election but that hoped they could impose their will through labor militancy. Compromising would have meant abandoning Cardoso's fundamental economic strategies for the country. As Veja explained: The recourse to the military can be explained by the President's political objective: to decisively defeat the only organized opposition to the government, the Labor Confederation. For a government which plans to end the inflation-adjusting of salaries, extinguish the privileges of the public employees, and intrude on the rights of the retired, defeating the strongest sector of the labor movement is an almost obligatory precondition. 18

Cardoso believed the president of a country such as Brazil must "be a strong personality, capable of making decisions." 19 Defeating the petroleum workers established his credentials as a decisive leader fully capable of using the powers of his office. The strike was essentially symbolic and political on both his and the union's part. Cardoso had no intention of denying the union its role as a collective bargaining agent for its members. He did intend to force Petrobras to compete with other companies, including foreign oil companies, and he could not allow the labor movement to veto those plans. The labor leaders continued to oppose the government, but their support was limited. On June 21, 1996, the three major labor confederations planned a general strike. Supportive pamphlets distributed by the U.S. American Federation of Labor/Congress of Industrial Organizations (AFL/CIO) promised that 20 million workers would shut Brazil down on the fateful day. Despite planners spending a million real on preparations, however, the impact was minimal. Public transit was barely affected, and only 500 workers showed up for a rally in Sao Paulo's Praga de Se. Perhaps the workers saw little point in

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striking since the demands were slogans almost everyone supported in principle: more jobs, better pay and retirement, and protection of workers' rights.

POLITICAL OBSTACLES

Privatizing state industries and checking organized labor proved much easier than cutting back on the prerogatives of Brazil's middle classes. These classes have always been better organized and more powerful politically than Brazil's working and lower classes, and they have traditionally depended on the Brazilian state to provide them with secure employment and business opportunities, protect their retirement benefits, and make sure their incomes and savings are not ravaged by inflation. Their demands were understandable, and middle-class people were willing to earn these prerogatives by going to school, passing employment examinations, and working at government or corporate j o b s at least until an early retirement. They felt they deserved their modest but comfortable lifestyles, and Cardoso agreed. He came from a similar background, and his children were embarking on similar careers. The problem was that some of the benefits the middle class had come to expect were too expensive for a country in which masses of people were living in misery. Inflation was a tax on the poor, who lacked access to the monetary correction mechanisms that protected the incomes of the middle class. State employees in particular enjoyed generous retirement benefits, often retiring in their early fifties or even in their forties with pensions higher than their salaries when they were working. Cardoso argued that "there is a social injustice here; the mass of Brazilian workers do not receive the same treatment." 2 0 T h e cost was very high—a third of the federal government's tax revenues went for personnel and retirement costs. And worst of all, much of the government bureaucracy was widely believed—even by those who worked in it—to be inefficient and ineffective. T h e top fiscal priorities of the Cardoso administration were to increase tax collections and cut government expenditures, especially for retirement benefits. In the long run, the government economists argued, this would be necessary to keep inflation under control. Eventually, they would run out of state industries to sell to pay the bills. In struggling to cut back on state expenditures, Cardoso was up against the very democracy he had fought so hard to reestablish. The 1988 constitution, which he had done so much to enact, guaranteed

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economic rights to a large number of powerful interest groups, as well as generous pension benefits to beneficiaries of the government's social security system. Workers received a cut in the work week from forty-eight to forty-four hours, time and a half for overtime, a 40 percent indemnity for dismissed workers, and 120 days of maternity leave. Civil servants were guaranteed life tenure, and governors and mayors were guaranteed a large share of federal revenues. Petrobras was guaranteed its monopoly, and foreign producers were excluded from the computer industry. These benefits were highly desirable, at least to the people who benefited from them, but they were expensive. Businesspeople claimed the regulations pushed the cost of doing business so high that it was difficult to compete with foreign producers, a phenomenon referred to as the "Brazil cost." Small businesses could often survive only by operating informally outside the official system, to the extent that as many as half of the country's workers were on the margins of the legal system. Government salaries and benefits could be paid only by running inflationary deficits. Many of these benefits were locked into the constitution and could be changed only by a three-fifths vote of both houses of Congress voting on two separate occasions. At the beginning of his term, Cardoso decided to push for a number of constitutional amendments because he believed the political momentum from his landslide election and the success of the Piano Real would be enough to get them through Congress.

SOCIAL SECURITY REFORM

The most difficult issue was social security reform. A number of provisions were locked into the constitution that were very costly and that primarily benefited high-income workers. Retirement at full pay was guaranteed after thirty-five years of service for men and twenty-five years for women regardless of the retiree's age. Certain categories of public employees, such as college professors, received especially generous retirement provisions. Public employees such as teachers are poorly paid, often receiving no more than the equivalent of $400 a month, which makes it difficult for them to pay for their own retirement. With an aging population and limited tax revenues, however, it was difficult to see how the government could afford to pay for an increasing number of people who retired in their fifties. The government developed a number of proposals, including one that would require that men and women must work until age

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sixty-five to receive retirement benefits, perhaps with an exception if they had paid into the system for thirty-eight or forty years. Another proposal suggested that early retirement should be limited to people w h o w o r k e d in u n h e a l t h y o c c u p a t i o n s , such as coal m i n i n g . Yet a n o t h e r suggested privatizing r e t i r e m e n t plans, a r e f o r m that had worked well in Chile. Middle-class voters viewed these ideas as an assault on their economic security. Cardoso tried to reassure t h e m that the p r o p o s e d changes were for the future, insisting "I am not going to mess with a n y o n e ' s r e t i r e m e n t . " 2 1 D e s p i t e his r e a s s u r a n c e s , m e m b e r s of Congress were inundated with complaints f r o m constituents, who saw the proposed reforms as an attack on the elderly. In three successive votes in 1996 the government was unable to pass its key social security reform measures; in fact, the n u m b e r of votes decreased each time. Meanwhile, more and more workers exercised their early retirement rights in the fear that they would soon be taken away, so the drain on the treasury grew steadily worse. C a r d o s o b e c a m e increasingly f r u s t r a t e d in his dealings with Congress over social security reform and other issues. He felt Brazil was the victim of a "fear of failure" (fracassomania) and complained that "the old-fashioned thinking [velharia] which still dominates sectors of Brazilian thinking, particularly among organized groups, prevents them f r o m seeing that we have to break with the bureaucratic norms of the past." 22 Many journalists believed the members of Congress seemed concerned more with obtaining the maximum possible benefits for themselves and their key constituents than with making policy changes that would benefit the nation as a whole. Time and again Cardoso's a t t e m p t s to r e f o r m social security w e r e r e b u f f e d . In May 1998 Congress defeated a measure to require that male retirees be fiftythree years of age and have contributed for thirty-five years before retiring. Women, despite their l o n g e r life span, would have b e e n allowed to retire at forty-eight years of age and thirty years of contribution. W h e n the government obtained only 307 of the 308 votes n e e d e d f o r t h e p r o p o s e d r e f o r m , t h e o p p o s i t i o n m e m b e r s of Congress sang the national a n t h e m to c o m m e m o r a t e their victory. Cardoso was angered, commenting publicly that "people who retire at less than fifty years of age are vagabonds, enriching themselves at the expense of a nation of the poor and the miserable." 23 This s t a t e m e n t o f f e n d e d m a n y Brazilians, w h o felt they h a d earned their seemingly early retirement. Some people are forced to begin hard physical labor at a very young age, perhaps age fifteen or sixteen. After thirty years of such heavy work they may be physically

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exhausted and need their retirement benefits, which are modest. Cardoso quickly explained that he did not mean these workers but instead referred to highly paid office workers who "retired" to take a second high-paying job. Such early retirement, however, is accepted in Brazilian culture, in which jobs are often viewed as an entitlement. In fact, the newspapers pointed out that Cardoso himself had been involuntarily "retired" from the University of Sao Paulo. The university continued to pay his salary during that period of "retirement," when he built his research institute. When he reached age forty-eight the law forcing his retirement was revoked, and he could have returned to the university. He chose to keep drawing his retirement pay and continuing his research. This tradition of early retirement was less burdensome when Brazil's population was growing rapidly and a large number of young workers supported the retirees. As the birth rates declined and health improved, the proportion of older people increased, making it difficult to fund retirement programs without incurring inflation. There is no easy answer to this problem, which many countries face, but Brazil's early retirement laws make the problem much worse than is the case elsewhere. Cardoso had been a senator for many years and knew the members of Congress well, but he seemed impatient with the legislative process. He spent a good deal of time traveling abroad to attend conferences and meetings with diplomats and businesspeople. These trips were important for the nation, and foreign dignitaries were eager to meet the president. Domestic matters, meanwhile, could be dealt with through the mechanism of the provisional measures described previously, which allowed the president to pass a law for one month without congressional approval; the measures could be continued for a month at a time as long as Congress did not overrule them. The provisional measures were originally intended for temporary use in emergencies, but they have often been used for fundamental government policies—including many of the provisions of the Piano Real. Cardoso used these measures more frequently than any of his predecessors, passing 143 in the first three months of his administration alone. He was hardly the "do-nothing" president Dornbusch portrayed him to be. With these measures Cardoso was able to control inflation by keeping the exchange rate fixed and interest rates high enough to prevent the economy from overheating. But he could not use the measures for more fundamental structural changes, such as social security reform, which were necessary in the long run.

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SCANDALS AND CORRUPTION

From the beginning, Cardoso and his top administrators knew they had to avoid even the appearance of corruption. Among other things this meant they had to follow strict guidelines about accepting gifts or payments that might be construed as bribes. Brazilian political culture, however, generally anticipates that businesses that profit from government contracts or that need to be licensed by government agencies will share some of their profits with their political contacts. Under the military regime, the informal norm held that about 10 percent of the value of government contracts would be kicked back to government officials. The Collor de Mello government reportedly took 40 percent of government contracts in graft, thereby accumulating about $2 billion a year. This amount greatly exceeded the norm and threatened to concentrate so much wealth in the administration's hands that it could run the government as a personal fiefdom. In making appointments to his administration, Cardoso relied heavily on individuals from Sao Paulo whom he had known for years. By and large, Cardoso was successful in choosing people who had no visible association with corruption. One unfortunate event, however, forced several of his close advisers to resign. The most important of these was Francisco Graziano, who had been closely associated with Cardoso since 1986 when he coordinated Cardoso's Senate campaign. Graziano had been appointed chief of the president's Personal Office at the beginning of his term. Graziano was an agronomist, and Cardoso had appointed him to direct one of the government's most sensitive agencies, the National Institute o f Colonization and Agrarian Reform (INCRA). Graziano was caught wiretapping the telephone of one of Cardoso's other advisers, Chief of Ceremonies Julio Cesar Gomes dos Santos, who was suspected of influence peddling with the Raytheon Corporation. The brother of the director of the federal police, Paulo Chelotti, was also involved in the wiretapping. In his resignation letter Graziano alleged that "strange forces" were threatening the Cardoso administration. The incident caused much agitation in Congress because it involved officials at the highest levels of the administration, and no one knew where it would lead. Workers' Party Congressman Jose Genoino said, "No one buys the story that this wire tap was done because of an anonymous tap about drug trafficking. Everyone wants to know if anything else was recorded." 24 The Raytheon Corporation had a five-year contract to build an

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Amazon Radar Defense Network as part of a $1.4 billion dollar proj e c t called the Sistema de Vigilància da Amazònia (SIVAM). 2 5 T h e company was contracted to build a network of radar stations, satellites, and sensors to monitor environmental problems; provide weather forecasting; and help to control forest fires, drug trafficking, and airplane traffic in the Amazon region. In 1 9 9 4 Raytheon was scheduled to begin the SIVAM project, w h i c h was o v e r s e e n by t h e B r a z i l i a n M i n i s t r y o f S p a c e a n d Technology. In November 1995 the news magazine Isto E published what it said were transcripts of conversations between Gomes dos Santos, who had recently been appointed ambassador to Mexico, and Raytheon's Brazilian representative, J o s é Afonso Assumpgào. T h e transcript included a discussion of Assumpgào's frustration because a Brazilian senator seemed to be stalling the project. The ambassador's response, according to Isto E, was, "Why? You have already paid him off." This was the Cardoso administration's first scandal, and Cardoso called an emergency meeting on November 17, 1995, with the minister of foreign relations, the justice minister, the speaker of the House, and his press secretary. The group reviewed transcripts of the recorded conversations, and Gomes dos Santos resigned his position as a presidential aide. He had accepted a trip to Miami and Las Vegas on a private j e t belonging to the Raytheon representative. Gomes dos Santos said he had "hitched" the ride on a vacation trip and had paid all of his other travel expenses out of his own pocket; thus the rules covering official trips did not apply. No evidence of major bribe taking or corruption has been revealed in the case.

T H E BANKING CRISIS

T h e second major crisis for the Cardoso administration was the collapse of a large number of major Brazilian banks. Between July 1994 a n d F e b r u a r y 1 9 9 6 , fifteen banks were liquidated by the Central Bank, and six others were placed under federal intervention—including the banks of the states of Rio de Janeiro and Sao Paulo. 2 6 These banks are closely tied to the political elites in the Brazilian states, and they frequently make loans on favorable terms to business ventures in which leading political figures have interests. In turn, businesses in which the banks have an interest are treated favorably by the state governments. T h e banks also profited from high inflation rates because money deposited with them quickly lost its value. For example, politicians

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authorized the banks to collect utility payments from citizens and gave them three days to pass the money on. This three-day float may seem inconsequential, but if inflation is running at 50 percent a month it amounts to a 5 percent profit on all money processed. In 1993 the forty largest banks made $9.1 billion from this floating money; in 1995 the amount declined to $203 million because of the low inflation rates under the Piano Real. The Piano Real also kept interest rates high to prevent the economy from overheating, which made it difficult for the banks to make loans. Many congressional leaders wanted to create a Congressional Commission of Inquiry to uncover the corruption that had led to the bank failure. Cardoso successfully opposed this measure, believing it would be distracting and would not be fruitful. Instead of punishing individuals, he focused on finding a way to protect the depositors whose f u n d s h a d b e e n lost. T r e m e n d o u s sums of money were involved; the Banco Econòmico of the state of Bahia, for example, had a $3.5 billion shortfall. The bank was closely tied to the state government, which had long been controlled by Cardoso's close ally, Liberal Party leader Antonio Carlos Magalhàes. The latter led the entire Bahian congressional delegation into a meeting with Cardoso, seeking federal help to protect the bank's depositors. The press, especially in Sào Paulo and Rio de Janeiro, portrayed this situation as a power struggle between Cardoso and Magalhàes, as if the president were being forced to cave in to pressure from the Liberal Front Party. The Workers' Party jumped in, insisting that the federal government must not pay off the corrupt bankers. Cardoso responded to this barrage by insisting that he could not be intimidated and promising not to spend "even a penny" of the public's funds to bail out the bankers. The problem, however, was that no federal insurance system was in place to protect bank depositors, and tens of thousands of ordinary citizens were in danger of having their savings wiped out. Massive bank failures could have led to a collapse of the economy as a whole. Experts agreed that Brazil had too many banks—more than France and Canada combined—and that consolidations would have to occur. The government developed a set of mechanisms whereby solvent banks would be given tax breaks and other advantages if they would take over their insolvent competitors. The Banco Econòmico was split into two parts. The smaller, viable part was sold to the Banco Excell, which injected $309 million in capital—part of which was supplied by Swiss banks. The larger, unprofitable part of the Banco Econòmico was put under government intervention and liquidated. The Banco Nacional, Brazil's seventh largest bank based in the state of Minas

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Gerais, was acquired by Unibanco, another bank from the same state. With these consolidations and a number of privatizations a collapse was avoided, and the banking system became more efficient.

LAND REFORM

Land reform has long been a sensitive issue for Brazilians because it harks back to an era when wealthy plantation owners exploited masses of slaves and impoverished peasants. When Cardoso was a youth, the Brazilian Communist Party denounced the landlords as a backward, quasi-feudal class that used corrupt political machines to manipulate the votes of uneducated peasants. Land reform was seen as a way to break these backward political forces and move the political spectrum to the left. Reform was a major demand of the leftists who were defeated in 1964, and the issue was raised again at the 1988 constitutional convention. This might seem like an easy problem to resolve since Brazil is an enormous country with a great deal of underutilized land. Many landless farmers would be eager to farm this land if the government would give them title to it. With a little help from the government, the farmers could become self-sufficient on their own plots instead of flooding into the cities looking for work. That was the vision of a group of Catholic and Marxist radicals who organized the Landless Farmers' (Sem Terra) movement to agitate for the immediate distribution of land to the landless. In principle, no conflict exists since the constitution provides for land redistribution and almost everyone sympathizes with the desperately poor farmers who only want a chance to earn an honest living on the land. A number of settlements have been established—both before and during Cardoso's administration—and the residents seem happy and enthusiastic. In practice, however, the Sem Terra movement has been a persistent source of irritation for the Cardoso government. First there are administrative problems. Deciding which land should be given away and who should get it seemed to have been beyond the capability of the large government bureaucracy established for the purpose. Rather than tolerate endless bureaucratic delays, the Sem Terra movement organized groups of peasants to occupy land and demand that the government recognize their settlements. These occupations are resented by the landowners whose property rights are being violated, and there have been numerous violent incidents and even some killings. The government is reluctant to recognize illegal settlements for fear that doing so will encourage more and more people to

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take the law into their own hands. Evicting penniless settlers, however, seems heartless and constitutes bad public relations. Faced with this problem, the Cardoso administration has done its best to reform the land reform agency, and it has redistributed more land than all previous administrations combined. By 1997 40,000 families had been settled on farms, with the number expected to reach 280,000 by the end of Cardoso's first term. The enthusiasm of the Sem Terra movement can be exhilarating. For example, the settlement of Santa Rita, near the state capital city of Porto Alegre in the southernmost state of Rio Grande do Sul, has been legally recognized for ten years. The land was a 2,040-hectare private farm and alcohol factory that had declared bankruptcy and been repossessed by the Bank of Brazil. The Bank was doing nothing with the land, so it was comparatively easy for the land reform agency, INCRA, to turn it over to the peasants. When I visited Santa Rita in July 1997, the residents were celebrating a wedding. Everyone was singing and dancing and feasting on skewered meat in the traditional gaucho style. The happy scene was reminiscent of an Israeli kibbutz back in the 1940s when the movement was just getting established. The community was tightly knit, held together by a common cause and a vision of a better future. There is, in fact, some organizational similarity to a kibbutz. Many of the residents of Santa Rita have formed a cooperative called Coopan. Most of the members grew up on small family farms, and their parents barely scraped by financially. They hope they can do better as a cooperative because they will be able to afford to buy agricultural equipment such as tractors, one of which can serve twenty families. They can also organize day care centers and purchase supplies more cheaply. Membership in the cooperative is voluntary, however, and most of the families in the settlement have chosen to r e m a i n on private plots. T h e cooperative has 800 of the 2,040 hectares of land. Life in an agricultural settlement is appealing as long as one does not mind the absence of television, movie theaters, nightclubs, shopping centers, and other pleasures of modern life. The residents entertain themselves with sports and have a rich spiritual life. The Sem Terra movement is strongly supported by progressive activists within the Catholic Church, who see the movement as an assertion of human dignity and concern for the poor. One might think the residents would be grateful to the government that made this rural paradise possible, but they are not. The residents are certain that left to its own initiative, the government would do nothing to help them. The government responds only to pressure and then gives them less than they need. The leader of the coopera-

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tive thought President Cardoso was a very intelligent man who was following the same liberal policies as those in other countries. The true power in Brazil, he thought, was the United States. The Brazilian government acted for the upper middle class and not for the workers. This was just his opinion, he hastened to add. The community is not affiliated with any political party, and members have a variety of ideological views. As is often the case with Utopian communities, economics is a problem. Without government subsidies, the Santa Rita settlement would not be viable. The settlement receives subsidized credit from the government at an interest rate of 2 percent; even so, it has difficulty making ends meet. The year before my visit Santa Rita had no harvest because of a drought and was unable to make the payments on its subsidized government loans. On the way home I asked my escort whether the agricultural economics of the settlement had been analyzed. Is it possible for 100 families to make a decent living on 2,040 hectares of land? He said it was impossible; at best, the settlers might scrape out a bare subsistence from the land, eating food they grew themselves and living in homes built with their own hands. The hope is that industries or businesses can be organized on the settlements to supplement the agricultural income, although that, too, would require government subsidies. The sad fact is that small, poorly funded family and collective farms are not viable in the modern world economy. One cannot put penniless farmers on plots of land without giving them substantial resources. The director of the settlement program, Aecio Gomes de Matos, says each family on a settlement costs the government a minimum of $19,000, which includes payments for food, housing, fencing, roads, equipment, fertilizers, seed, and community infrastructure such as schools and electrification. In principle, most of this money is loaned to the settlements, which should eventually become self-sufficient and pay back the loans. But none has left the program, and the Sem Terra movement discourages them from doing so. Gomes de Matos is frustrated at the outflow of money, which is needed by many other worthy groups. He asks "What about the reform of the urban slums? And the homeless? This money must have a limit. The settlers are going to have to break away from the paternalism of the state." 27 The Sem Terra movement is creating a new category of dependents on government largesse at a time when the government can ill afford the groups it is already subsidizing. The landless peasants are certainly more needy than the bureaucrats whose salaries have been driving up the government deficit for years, and they are a potent political symbol. Cardoso and his advisers do not believe redistribut-

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ing parcels of land to small farmers is a viable development strategy for Brazil, which is doing fairly well with large-scale commercial agriculture, but they must support the Sem Terra movement for symbolic reasons. At first Cardoso refused to meet with the leaders of the movement because of their refusal to go through legal channels. When the leaders mounted large demonstrations in Brasilia, however, he gave them an audience. Cardoso also made an unannounced visit to a Sem Terra settlement near his farm in the state of Minas Gerais. He had a friendly visit with the residents, assuring them that he was sympathetic to their efforts. The leader of the movement, Joao Pedro Stedile, often quotes Ruth Cardoso as saying "without pressure, the society will n o t change," and Fernando Henrique has been persuaded that this is true. He believes the Landless Farmers are faced with a situation out of the nineteenth century and that they must respond with a nineteenth-century political strategy. Cardoso knows the movement "has people who imagine that they are making a socialist revolution. There are those who even think of armed revolution, who use the photograph of Guevara as inspiration. But this has little importance historically. They will not make a revolution, they do not have the conditions to do so." If the m o v e m e n t goes too far " t h e r e will be repression, whether I want it or not. The land owners will organize themselves, go there and kill [the landless squatters]." 2 8 Cardoso believes his role is to balance these forces, to use pressure to bring about feasible change while keeping the backlash under control. He is doing this by accelerating the land redistribution and making funding available to small farmers through a variety of mechanisms while using police forces to control excesses on both sides.

ADMINISTRATIVE REFORM

Brazilians have long felt their country is b u r d e n e d by too much bureaucracy, not because there are too many government employees but because so much of their work seems pointless and counterproductive. For example, in the state of Sao Paulo alone an average of 127,000 signatures are notarized by notary publics every day, most on routine documents that would not require notarization in other countries. 29 The notaries rarely know the people who come into their offices and often do not ask for identification. Customers waste time waiting in line, pay a fee, and get the stamp on their documents. There are also despachantes, or documents brokers, who specialize in getting documents through bureaucracies. Often these professionals

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simply pass on a portion of their fee to the appropriate bureaucrat to obtain the permit or document their client needs. The state of Sao Paulo alone has 10,500 despachante offices; much of their business could be dispensed with if government procedures were simplified. The Brazilian bureaucracy has survived under military and civilian governments of both the left and the right because the sanctity of secure government employment is deeply rooted in Brazilian and Portuguese tradition. Under the colonial system faithful servants of the crown were given government jobs as a reward for their loyalty, and the practice has been continued by politicians throughout Brazil's history. Brazilians who are employed by the government— whether federal, state, or local—believe they have a right to their jobs. Brazilian bureaucrats were flabbergasted when President Bill Clinton closed down the "nonessential" parts of the U.S. federal government because funding was cut during a dispute with Congress. In Brazil it is unheard of to send government employees home because there is no money to pay them. Some states spend more than 100 percent of their tax revenues on their employees' salaries, even though this means nothing is left for the services the employees are supposed to provide. When the states go bankrupt, they call on the federal government to bail them out. True libertarians, or neoliberals, believe the solution is simply to close government agencies and allow the free market to take over their functions. As a social democrat, however, Cardoso was frustrated more with the ineffectiveness of the government than with its cost. There were many things he wanted the government to do, but the agencies responsible for those tasks were often excruciatingly slow and inefficient in carrying them out. The National Agrarian Reform Institute was a perfect example; for Cardoso the fundamental problem was not the cost of the agency's staff but its failure to distribute enough land. The solution, then, was not to abolish the bureaucracy but to reform it, just as other social democratic leaders around the world were trying to do. Cardoso thought Brazil needed a full-time Ministry of Administrative Reform, and he put one of Brazil's outstanding social scientists, economist Luiz Carlos Bresser Pereira, in charge. Cardoso had first met Bresser Pereira in the 1960s when both men were doing research on the Brazilian entrepreneurial class. Beginning in 1970 Bresser Pereira had worked closely with Cardoso on the governing council of CEBRAP. His academic works included a book on entrepreneurs, essays on intellectual history, and a major contribution to the theory of inertial inflation that was the intellectual underpinning of the Piano Real,30 He had significant experience in public administration, having served as chairman of the State Bank of

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Sao Paulo, chief of staff of the government of Sao Paulo, and secretary of science and technology of Sao Paulo. Bresser Pereira was finance minister of Brazil in 1987; he put together an anti-inflation plan that was only temporarily successful. He believed his plan had failed largely because the government at the time was unable to make the fundamental reforms necessary to sustain it over the long term. Now he was eager to help Cardoso avoid the same fate. He developed an administrative reform plan that outlined the requirements for lasting reform. 3 1 Bresser Pereira's analysis showed that real progress in administrative reform had been made in the last years of the military regime but that the process had been set back by the 1988 constitutional convention. Military President J o a o Baptista de Oliveira Figueiredo had created a Ministry of Debureaucratization that streamlined many government agencies, cutting back on rigid rules and unnecessary red tape. Pockets of efficiency were created in many agencies, and many functions were t u r n e d over to s e m i a u t o n o m o u s a g e n c i e s that were e x e m p t from civil service regulations. T h e s e reforms had b e e n stymied by the 1988 constitution, which required that all semiautonomous agencies must follow the same regulations as the government's civil service. The new constitution weakened the presidency and strengthened the autonomy of the government ministries. This was done, Bresser Pereira thought, to protect Congress's patronage privileges and to defend the top bureaucrats who felt they had been unjustly accused by the military regimes. Bresser Pereira proposed to replace the hierarchical, bureaucratic model of public administration with a managerial model. In the former model every employee action is governed by detailed regulations, and employees are evaluated according to how well they follow the regulations. In the latter model managers are given autonomy and flexibility to run their agencies and are evaluated according to how well they accomplish their goals. Employees who perform well should be given promotions and pay increases, whereas those who do not should be held back or discharged. In Brazil all employees had secure employment, and there was little flexibility in pay scales. Early retirement with full pay and benefits was available, and the ratio of inactive to active employees was increasing steadily. In early 1995, 45 percent of the wage bill was going to inactive (retired) employees, who generally received the same wages as those who were working. Transforming public administration along managerial lines required legislative action because the rules and regulations were protected by the constitution. Most important, the government wanted the right to discharge government employees who were not performing well or whose services were no longer required or could not

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be afforded. Without this right it would be difficult if not impossible to change the bureaucratic culture in which employees knew they would have their jobs forever as long as they avoided major infractions of the rules. The government also wanted the right to subcontract functions to nongovernmental agencies and to use temporary rather than permanent government employees when doing so would be more efficient, to end early retirement and special retirement benefits, to limit employees to one retirement pension, and to cap public employees' pay so no public employee could combine multiple jobs and retirement benefits to earn more than the president of the republic. These reforms were fought by the public employees and their friends in Congress. On one occasion the opposition in Congress became so enraged over a measure to end lifetime j o b security for civil servants that they disrupted the voting with whistles, which held up business for an hour during which time deputies shoved, punched, and yelled at each other. Cardoso found this issue particularly difficult to win in Congress because legislative staff members were directly affected, and they were particularly effective at lobbying members of Congress to vote against the reforms. There was also intense lobbying by the Central Labor Union, which sent 100 demonstrators to invade the Chamber of Deputies during the vote on ending guaranteed employment for state employees. Another challenge was a strike called by the military police in the state of Minas Gerais that spread rapidly to other states. This strike was over higher pay, something everyone acknowledged the police deserved but that the states could not afford. The Cardoso administration responded by sending in army troops when needed to maintain order and leaving the governors of the states to negotiate with the police. Some governors gave in to police demands, although they had no idea where they would find the money for the pay increases. Others fired strikers who refused to return to work. Administrative reform is a gradual process that includes both constitutional and legislative changes and less formal changes in administrative practices and culture within ministries. The most difficult issue to reform has been early retirement and excessive retirement benefits, which many Brazilians regard as a sacred right. In August 1997 it was discovered that at least 25,000 employees of stateowned companies were also receiving social security retirement benefits, although that is illegal. Gradually, however, these abuses are being uncovered and eliminated, and the number of government employees is decreasing as a result of privatization, out-contracting, and other measures. The economic crisis caused by the world stock market dip in October 1997

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gave these measures new urgency and gave the government political support to use provisional measures to implement many reforms it had been waiting to get through Congress.

SOCIAL REFORM ISSUES

Cardoso was disappointed when a research institute affiliated with the bishops of the Brazilian Catholic Church released a document critical of his administration. The March 1997 report, An Analysis of the Brazilian Socio-Economic-Political Conjuncture, was written by two Rio de Janeiro social scientists, Ivo Lesbaupin and Antonio Abreu. 32 Politically, the report sought to rally the moral force of the church against Cardoso's policies in much the same way Cardoso and his colleagues had d o n e against the military regime in 1975 with the churchsponsored publication Sao Paulo: Growth and Poverty. The Lesbaupin and Abreu critique was an articulate statement of the concerns many social activists had expressed about the Cardoso government. By closely examining the report and the Cardoso administration's response, we can see how well the criticism can be supported. The report began with a critique of globalization and neoliberalism as exemplified by such world figures and institutions as Margaret Thatcher, Ronald Reagan, and the International Monetary Fund. It accused Cardoso of sacrificing the welfare of Brazil's poor to this global movement. The report mentioned the widely cited statistic showing that Brazil is the most unequal country in the world, and it claimed that the minimum salary had declined under the Piano Real even as the country's gross domestic product was increasing. The authors cited unemployment as the most serious problem facing poor people in Brazil and claimed it was increasing. When Cardoso was inaugurated he promised to emphasize five social programs: education, health, employment, agriculture, and security. Lesbaupin and Abreu claimed these areas had been underfunded and that the government instead had spent money on programs that helped big business, bankers, and large landowners. On a more philosophical level, Lesbaupin and Abreu attacked Cardoso for not protecting "social rights," by which they meant rights to education, health, housing, transport, employment, and labor unions. The Social Doctrine of the church, as they understood it, affirms these rights and asserts that it is the primary responsibility of the state to assure them. Neoliberals, by contrast, claim that the state c a n n o t provide these things and that people should seek them through the market. In the authors' view neoliberalism is a return to the "law of the jungle," where only the strongest will survive.

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Lesbaupin and Abreu did concede one very important point to the government: that it had controlled inflation. The authors agreed that this had "very beneficial consequences for the population, especially for those who are most poor." Having reluctantly made this concession, however, they went on to argue that controlling inflation had n o t cut inequality since everyone's incomes went up. Furthermore, they argued, the privatization process was weakening the ability of the state to provide jobs and social programs. Land continued to be concentrated a m o n g wealthy landowners, and the government had not d o n e enough to redistribute it to the poor. T h e authors e n d e d with the h o p e that the people would rise u p and oppose the neoliberal trend, as the French had recently d o n e by e l e c t i n g a socialist g o v e r n m e n t . Only in this way, they believed, would h u m a n dignity be given first priority a n d social justice be achieved. Such criticism is potentially damaging to Cardoso because it seeks to portray him as a technocrat who cares about big business but not about the common people who are suffering. In public opinion polls, voters who oppose Cardoso generally say they feel he has not d o n e e n o u g h for social programs. He is often attacked for spending billions to bail out bankers while pinching pennies on health and education. Cardoso's more responsible opponents, however, concede that he had little choice but to rescue the banks; otherwise, millions of c o m m o n p e o p l e would have lost their savings, a n d the e c o n o m y would have been devastated. Cardoso's strongest response to these attacks has been to insist repeatedly that the poor are much better off u n d e r his government than they were before. 3 3 This was undeniable; it was supported by all i n d e p e n d e n t data sources, including market researchers who track t h e sales of basic f o o d s t u f f s a n d social r e s e a r c h e r s who tally the a m o u n t of garbage collected in p o o r n e i g h b o r h o o d s . U n d e r the Piano Real poverty was down sharply, and the poor were eating and living better. In the words of the Inter-American Development Bank: Many of the benefits of price stability accrued to the poor. This was evidenced by their increased consumption, not only of food and other basic staples but also of a wide variety of durable and semidurable goods. The importance of these trends for Brazil's social welfare cannot be overestimated. Besides increasing the size of the effective domestic market, recent studies indicate that the number of persons living in absolute poverty declined by 13 million between 1993 and 1995, a result which reduced the proportion of the population living in such conditions from 30 percent of the total population to 20 percent over the same period. Available evidence suggests that these same trends continued throughout 1996. 34

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It is difficult to sustain a moral critique of a government that has lifted millions of people out of poverty. Much of Lesbaupin and Abreu's argument depended on guilt by association. Cardoso is a neoliberal, they asserted, and neoliberals are malicious; therefore, Cardoso's policies must be harmful. In addition to this name calling, the authors offered statistics they claimed showed that minimum wages had decreased u n d e r the Piano Real. But Cardoso's office showed that those statistics were defective, largely because they had examined wages at the beginning of the month without considering that their value had been eaten away by inflation. No twisting of statistics can deny the fact that the Piano Real raised the living standards of the poor. If it did not lessen inequality that was because the economy was booming, so middle-class and upper-class people were also doing well. Only this kind of economic growth can provide the resources to fund health care, education, and other social programs without reinflating the currency and reimposing suffering on the poor. In his message to the National Congress in February 1998, Cardoso was able to report real, tangible progress in social indicators. The real value of the minimum wage increased 47 percent between December 1994 and December 1997, much to the benefit of poor people and those living on retirement pensions. The percentage of the population in absolute poverty fell from 32 percent to 25 percent during that period, with poverty defined as a per capita income under R$45 per month. The nation's per capita income had passed the $5,000 benchmark, putting Brazil in the UN category of middleincome countries. The n u m b e r of students enrolling in middle school increased 28 percent between 1994 and 1997, which meant more and more children were completing primary school. Infant mortality declined from 48.4 deaths per 1,000 live births in 1990 to 33.7 per 1,000 in 1997, and other health indicators were positive. Unemployment was higher than desired, particularly in the metropolitan Sao Paulo area, as industries moved to lower labor cost areas. But unemployment rates averaged between 5 and 6 percent a year, lower than those in most other countries. Although much remained to be done, the country was making real progress in improving the lives of its people. As powerful as it was, ending inflation was a one-time accomplishment that cannot be repeated. Critics insist that continued progress will require improvements in social programs, especially health and education, but everyone agrees—including Cardoso, the World Bank, and even liberals such as Roberto Campos. Brazilian society is so unequal primarily because of low spending on primary education, especially compared with Asian countries at similar levels of overall

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development. When Cardoso tried to pass a bill mandating a raise in primary schoolteachers' salaries, however, it was stymied by a congressional coalition that included the Workers' Party. Cardoso found it incredible that principled leftists, caught up in a political agenda, opposed a straightforward measure to get better teachers for poor children. The leftists opposed the measure because Cardoso insisted that the state governments help to fund it, which would have cut into funds available for civil servants already on the payroll. Cardoso is a difficult target for the left because he insists he is a social democrat, not a neoliberal, and he supports social programs. Cardoso disagrees strongly, however, with critics who assume that the amount of money spent is a valid measure of what his administration is accomplishing. He asks that his administration be evaluated by the outcomes of its efforts rather than by money inputs. At a 1997 press conference he said: We must change our view, on spending in general, but, in particular, on social expenditures, from the quantitative to the qualitative. This is the great battle. Not to have more money, but to use the money better and see if it is possible to cut some expenses which are not necessary and make others which are necessary. I am left a little saddened when I see an analysis which says, "The government is spending less on this area." They always say that we are spending less on social problems, which is a bit irritating. "They are spending less on education." They never ask, why? Actually, this is not the case, but let us suppose it is. They never ask why we are spending less, if we are? Why? Because, if we cut an unnecessary e x p e n s e , o n e should applaud. If we cut a necessary expense, then criticize. 35

When Cardoso took office he found that many government agencies were not performing their functions. Money was spent, but little or nothing was happening. Ruth Cardoso, who took a special interest in social matters, insisted that "I cannot think of a single area where we could have done more if we spent more money." 36 The infrastructure simply was not in place to allow money to be spent effectively. The Cardosos believe administrative reform is needed to make government agencies more efficient and that much more can be done by nonprofit organizations in cooperation with the government. To promote this approach, Ruth Cardoso assumed leadership of a program called Community Solidarity that supports nonprofit initiatives.

SUCCESSFUL REFORM: CHARA AS A MODEL

Critics suspect that Community Solidarity is mostly a public relations exercise to cover up a lack of government funding for social pro-

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grams. It is difficult to be cynical, however, when one sees how the program is working at the local level in places such as the impoverished northeastern state of Ceara. Ceara is in many ways an example of what the Cardosos want to accomplish on a national level. The social democrats have been in office in Ceara since 1987 when Tasso Jereissati was elected governor. Their accomplishments have been carefully and objectively documented in a U.S. scholarly book, Good Government in the Tropics, which uses Ceara as a case study of effective government. 37 The book shows on a concrete level what Cardoso and his fellow party members mean by social democracy in Brazil today. Although European social democracy was based on the labor movement, in Brazil it has been largely a middle-class movement. In Ceara it got its start among a group of young businesspeople. Jereissati was part of a group of entrepreneurs who organized to challenge the state's traditional leaders. These young business leaders were active in modern industries—such as soft drink distribution, television, retail marketing, and services—that depend on the buying power of local residents for their sales. The traditional elites in the Brazilian northeast had exported agricultural products to foreign markets and were interested more in keeping wages down than in expanding buying power. These traditional leaders maintained oldfashioned political machines that distributed patronage jobs. Ceara's patronage system was in crisis in 1987, as it is today in many Brazilian states, because payrolls had grown too large for the state to pay. Salaries were consuming 87 percent of the state government's revenues. The social democrats promised to trim the government, and they kept their promise with startling alacrity. One of the first acts of the Jereissati administration was to cut 40,000 "ghost" workers from the state payroll of 146,000 employees. These were people who never showed up for work or who held two or more full-time state jobs at once. The administration slowed the indexing of state salaries to inflation, cutting real salaries and capping state salaries; it also insisted that all new hiring be done through competitive exams. As a result of these measures, salaries were down to 41 percent of state revenues by 1991. This administrative reform was bitterly resisted by many state employees and their supporters in the state legislature, just as Cardoso's reform is resisted by the maharajas of the civil service. Some early votes in the Ceara legislature ran 90 percent against the reforms, and for several months party leader Ciro Gomes was booed every time he entered the legislative chamber. All kinds of legal tactics were used in attempts to sabotage the reforms. Ultimately, however, the governor was successful because the fiscal crisis made emer-

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gency measures unavoidable: There was too little money to keep paying everyone. The most innovative part of the Ceará story, however, is not the budget cuts but the steps taken to make the government work. A key figure in this effort was the secretary of labor and social action, sociologist Jose Rosa. Rosa was a native of Ceará who had studied and worked in France and had moved to Brasilia to teach and work in the federal government. When the social democrats took power, Rosa eagerly accepted Jereisatti's request that he return to Ceará and put his ideas into action. Rosa loves Ceará's frontier spirit, insisting that "the Cearáense does not have the soul of a slave." Ceará had been settled by ranchers and cattlemen, including many blacks who had escaped from slavery on plantations in neighboring states. The work required free laborers who could be trusted to work on their own. When Rosa took office there was no time for leisurely planning or long-term goals because Ceará was hit by one of the p e r i o d i c droughts that are the bane of the Brazilian northeast. In the past, something of a "drought industry" had developed as the state and federal governments channeled relief money to big construction projects on the land of wealthy landowners. These projects had large overheads but provided employment for only a small number of workers. Many farmers and cowhands had to move to the capital city of Fortaleza or to southern Brazil in a desperate search for work. The social democrats decided to define the drought as a social rather than an agricultural problem. Aid was channeled through Rosa's Ministry of Social Action instead of through the Agricultural Ministry as it had been in the past. In keeping with the new spirit of democracy, Rosa used participatory planning techniques to develop a drought relief program. He traveled tirelessly throughout the state, meeting with community organizations that had sprouted up as part of the democratization movement. The people told him the most important thing was for each family to have at least one income, so projects were designed that were close to home and labor-intensive. The families with the greatest need were allocated one minimum wage job per household. When there was a man in the household, he usually took the job, but many households were headed by women with children. Often, the men had left to seek work in other parts of the country. The women could not do heavy physical labor for a full day and also meet their household and child care responsibilities, so they were trained as home health aides. They went from house to house giving advice on nutrition, vaccination, and hygiene. The program dramatically lowered the infant mortality rate, which had increased during previous droughts.

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Relief money was also used to fund day care centers, with local women trained to work in them. At first the women were volunteers, but few could afford to put in the hours without pay so they were given half a minimum wage, which was later increased to full minimum wage. The jobs were temporary, however, to offer the opportunity to as many women as possible and to encourage them to find other employment. The key to the success of this program was the fact that the day care centers were not government agencies staffed by state employees; they were organized and run by voluntary community groups under contract to the state. This cut down on bureaucracy and gave the residents experience in developing and administering their own programs. They learned to prepare budgets, supervise staff, and be accountable to clients and funding sources. One resource poor communities have in abundance is the energy and creativity of their citizens. Mobilizing this underutilized resource enabled Ceara to put maximum effort into services and to spend the minimum on administration. The number of day care centers in the state mushroomed from 9 under the previous administration to over 470 and is expected eventually to reach 1,800. This new philosophy of helping people to help themselves has been promoted throughout Brazil by first lady Ruth Cardoso, who made several visits to social programs in Ceara to promote Community Solidarity. Community Solidarity does not control programs like a traditional bureaucracy; nor does it simply give out help to the needy like traditional charities. Instead, the organization encourages neighborhood and community groups to organize to define and meet their own problems. When someone comes in with an emergency, such as an illness or a death in the family, they are asked what they can do themselves and what help they need in doing it. This philosophy has worked well in Ceara, often on a very small scale. A neighborhood group may, for example, lend a woman money to buy a sewing machine so she can earn her own living. She repays the money at a low interest rate so she learns about paying interest. The repaid money can then be loaned out again. In 1996 Ceara loaned out about $70,000 that had been repaid from previous loans. Another Ceara program that has been remarkably successful involves addressing the problems of street children, many of whom are drawn into prostitution and drug dealing. Social workers from community agencies gain the children's confidence and make contact with their families. They work on improving the family's situation—helping the parents find a j o b or obtain help with health or addiction problems, for example, so they can then help the children.

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Fernando Henricjue Cardoso

The program, which has received funding from international agencies, has dramatically reduced the number of children on the streets. Social democracy in Ceará has been good for business as well as for social welfare. In the years between 1987 and 1994, Ceará's economy grew at an average annual rate of 4 percent, compared with 1.3 percent for Brazil as a whole. This growth was funded with state resources, using money that had previously gone into salaries. State government is funding a number of economic development efforts, including irrigation projects and an improved port facility located next to an oil refinery. The government is also promoting tourism in the state, which has a long string of tropical beaches. The heavy reliance on state investment is not the result of an ideological bias in favor of government enterprise; the social democrats simply believe in doing whatever will work best in a given situation. In Ceará they found that private investment was unavailable for many key projects, so they have used state money. At the same time, they eagerly court domestic and foreign private investment. Small business is also encouraged by neighborhood centers that help people with the maze of bureaucratic paperwork needed to legalize a business. When Fernando Henrique and Ruth Cardoso talk about decentralizing social services and making administrative reforms, turning responsibility over to the states, and increasing partnerships with nonprofit organizations, the Ceará experience is the example they have in mind. Under Brazil's federal system, improving social services must be done by state and municipal governments. The cultural tradition, however, has been to hold the president and the federal government responsible for everything. In the past, when state governments allowed unproductive bureaucracies to grow to the point where they could not pay for them, they turned to the federal government to bail them out. Some states are still stuck in this pattern. In the traditional culture bureaucrats believe they "own" their jobs and the right to a paycheck no matter what they do. In Ceará's neighboring state of Alagoas, for example, an accounting official who was in prison for three years for homicide and drug trafficking was let out each month to pick up her $500 state paycheck. 38 Cardoso believes Brazilian society has matured to the point where states and localities can wean themselves from dependency on the federal government and take responsibility for their own affairs. In addition to Ceará, a number of Brazilian states and cities, under a variety of political parties, have actively reformed administrative practices and developed new programs. Much of the funding for these reforms does come from the federal government, and funds must be limited or inflation will return. Under Cardoso the federal government functions as a kind of domes-

The Intellectual in Power,

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