Social Policy Dismantling and De-democratization in Brazil: Citizenship in Danger (Societies and Political Orders in Transition) 3031351096, 9783031351099

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Societies and Political Orders in Transition

Sonia Fleury   Editor

Social Policy Dismantling and De-democratization in Brazil Citizenship in Danger

Societies and Political Orders in Transition Series Editors Alexander Chepurenko, Higher School of Economics National Research University, Moscow, Russia Stein Ugelvik Larsen, University of Bergen, Bergen, Norway William Reisinger, University of Iowa, Iowa City, IA, USA Managing Editors Ekim Arbatli, Higher School of Economics, National Research University Moscow, Russia Dina Rosenberg, Higher School of Economics, National Research University Moscow, Russia Aigul Mavletova, Higher School of Economics, National Research University Moscow, Russia

This book series presents scientific and scholarly studies focusing on societies and political orders in transition in Central and Eastern Europe but also elsewhere in the world, contemporary and historical. By comparing established societies, characterized by well-established market economies and well-functioning democracies, with post-socialist and other societies, often characterized by emerging markets and fragile political systems, the series identifies and analyzes factors influencing change and continuity in societies and political orders. These factors include state capacity to establish formal and informal rules, democratic institutions, forms of social structuration, political regimes, levels of corruption, specificity of political cultures, as well as types and orientation of political and economic elites. Societies and Political Orders in Transition welcomes monographs and edited volumes with diverse empirical and theoretical approaches from a variety of disciplines, including political science, economics and social sciences in general, as well as comparative politics, political history, political theory, comparative social research, and comparative economics in particular. Topics may include, but are not limited to, democratization, regime change, changing social norms, migration, etc. All titles in this series are peer-reviewed. This book series is indexed in Scopus. For further information on the series and to submit a proposal for consideration, please contact Johannes Glaeser (Senior Editor Economics and Political Science) [email protected].

Sonia Fleury Editor

Social Policy Dismantling and De-democratization in Brazil Citizenship in Danger

Editor Sonia Fleury Center for Strategic Studies Oswaldo Cruz Foundation, Coordinator of the Interinstitutional Study Group on Futures of Social Protection Rio de Janeiro, Brazil

ISSN 2511-2201     ISSN 2511-221X (electronic) Societies and Political Orders in Transition ISBN 978-3-031-35109-9    ISBN 978-3-031-35110-5 (eBook) https://doi.org/10.1007/978-3-031-35110-5 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface1

The recent emergence of authoritarian populist regimes in several countries is a phenomenon that needs to be explained beyond its surface manifestations. In addition to convulsing democratic political systems, these regimes seek to destabilize the administrative powers of the State, public policies, and citizenship rights, as it has been fully documented by the specialized literature. In this book, we investigate the origins of this phenomenon, establishing some causal connections between the rise of authoritarian populism, liberalization policies, and fiscal adjustment. Taking the case of the populist authoritarian government of Jair Bolsonaro as an object of analysis, we explain that the tactics employed by his government to dismantle bureaucracy and public policies, especially social policies, find expression in the fiscal austerity measures recently inscribed in the Federal Constitution: a counter-­ democratic device employed by technical and financial elites to systemically derail the social protection system. Through this in-depth case study, we intend to provide new theoretical arguments and concepts that can be useful to understand the dynamics of these new regimes, their implications for State-society relations—their permanence or probable recurrence in time—and to explain similar cases in other contexts. This study emphasizes that such de-democratization is not an exclusive result of the inflamed and upstart rhetoric of populist leaders. They convulse political systems, disorganize the state bureaucratic apparatus, and systematically attack the institutions of representative democracy, but they do not act alone. Focusing exclusively on populist leaders may obscure more than reveal. Complicit relationships of authoritarian populist leaders and market institutions and agents—carriers of “impersonality”—are still to be unveiled. Currently, the growing constraint of democratic expectations due to unrealistic fiscal interdictions and the myth of technical government has given rise to an environment conducive to the establishment of a curious symbiosis between plebiscitarianism and economic decisionism based on

 English Translation: Aaron Scott, Carolyn Bauer Oliveira, Clau Guimarães (Chief Translator and Editor). 1

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austerity rules. Such symbiosis forms the basis of the “authoritarian liberalism” that has marked the experiences of populist regimes around the world. However, it is necessary to answer the central question of this study about why the social rights of citizenship—which have been so difficult to build since the redemocratization of the country marked by the 1988 Federal Constitution—are currently being so easily deconstructed, dismantling public policies and social protection networks. Therefore, it is important to understand the nature of the Welfare State in situations of dependent economies and late-blooming democracies, in contexts with deep global connections and a predominance of coordination between transnational private interests, the financial market, and governmental sectors. To do that, theoretical analyses and their applications to the different public policies that constitute the core of social protection will be further developed. Democratic governments in Brazil, driven by social movements and political actors, have strengthened social protection through a distinctive institutional architecture that combines the strengthening of public bureaucracies, the creation of intergovernmental networks, and the democratic instances of social participation and agreement. The chapters of this book are dedicated to analyzing these transformations in different sectors of public policy: labor, employment, pensions, food and nutrition security, health, and social assistance. In each of them, we seek to analyze the recent trajectory from a political analysis of the main actors and institutions, reform processes and policy changes, and the results achieved. Finally, in dialogue with the literature on policy dismantling, the existing weaknesses in each of these social protection sectors are identified, as well as the dismantling strategies used which took advantage of such political and institutional weaknesses. Thus, this book intends to contribute to pointing toward a future in which the overcoming of authoritarian populism and austerity policies will provide solutions to the problems that have been identified as possible facilitators for the dismantling policy process and the de-democratization that has taken a paroxysmal form in Brazil, but to which, unfortunately, no current society is immune. Rio de Janeiro, Brazil  Sonia Fleury

Contents

Part I Theoretical Approaches to the Welfare State in Latin America 1

 The Welfare State: In Search of a Latin-­American Theory����������������    3 Sonia Fleury

Part II Austerity Policies and Economic Constraints 2

 The Institutional Construction of Post-­1988 Austerity������������������������   39 Carlos Eduardo Santos Pinho

Part III Employment and Social Security 3

 Labor Reforms and the Crisis of Democratic Corporatism����������������   63 Ronaldo Teodoro

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 The Dismantling of Employment Policies in Brazil: Employability without Rights������������������������������������������������������������������������������������������   85 Arnaldo Provasi Lanzara

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Pension System at Crossroads: Between Frail Solidarity and Financial Appropriation������������������������������������������������������������������  105 Fernanda Pernasetti

Part IV Networks of Social Policies Under the Aegis of De-Democratization 6

The Universal Right to Health in Brazil: From Restricted Expansion to Dismantling������������������������������������������������������������������������������������������  135 Lenaura de Vasconcelos Costa Lobato

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 The Brazilian System for Food and Nutrition Security: Tensions, Conflicts, and Paradoxes ������������������������������������������������������������������������  159 Luciene Burlandy

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 Advancing Toward the Past: The Dismantling of the Unified Social Assistance System������������������������������������������������������������������������������������  189 Mônica de Castro Maia Senna

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 Authoritarian Populism, De-democratization, and Social Policy Dismantling: Lessons from Brazil����������������������������������������������������������  217 Sonia Fleury, Arnaldo Lanzara, Carlos Pinho, Fernanda Pernasetti, Lenaura Lobato, Luciene Burlandy, Mônica Senna, and Ronaldo Teodoro

Part I

Theoretical Approaches to the Welfare State in Latin America

Chapter 1

The Welfare State: In Search of a Latin-­American Theory Sonia Fleury

We, Brazilians, are a people being prevented from being so.—Darci Ribeiro.

1 Introduction We are currently undergoing such an intense and fast-paced process of de-democratization in Brazil that we are left between perplexity and the need to reflect upon the factors that brought on a phenomenon of such magnitude—that eat away at values and institutions, normalizing violence and the most barbaric acts. In the face of such a situation, we are led to analyze the strategies adopted in building a social democracy from the creation of the modern State to the democratic transition, seeking to identify ideological and cultural constraints, the correlation between forces, and the financial and institutional limitations that presented themselves along the way. In our current situation, what stands out is the country’s subordinate insertion into a globalized economy under the aegis of financial gain, the seizing of the State by political and economic elites that, vying for public resources, demand the constitutionalizing of austerity policies, the rise of a belligerent right made up of a heterogenous mix including state-of-the-art capital goods sectors linked to agrobusiness and finance, ultraconservative religious leaders, illegal gold prospectors and paramilitary militias, military police officers and Armed Force officials fattened up during dictatorial administrations and preserved in democracy. State violence against the Black population living in favelas and urban peripheries has been normalized and justified as a war on drugs with police massacres, stray bullets, and police S. Fleury (*) Center for Strategic Studies, Oswaldo Cruz Foundation, Coordinator of the Interinstitutional Study Group on Futures of Social Protection, Rio de Janeiro, Brazil © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Fleury (ed.), Social Policy Dismantling and De-democratization in Brazil, Societies and Political Orders in Transition, https://doi.org/10.1007/978-3-031-35110-5_1

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operations being amply accepted. Mass killings also manifest themselves through the omission of public policies for fighting the COVID-19 pandemic and guaranteeing the right conditions for life, employment, health care, hygiene and sanitation, education, basic income, Internet access, etc. At the same time, we observe an extraordinary cultural effervescence in the favelas and urban peripheries where young people join collectives in which they rebuild, politically, positive identities based on their own living experiences. Indigenous peoples resist the destruction of their culture and the environment producing the first group of intellectuals that fight for their rights and demand respect for their ancestry. The positive affirmation of peripheral subjects (D’Andrea, 2020) establishes itself beyond claims of neediness and prejudice based on race and territory on which class exploitation is based, of a denial of rights, of subservience in exclusion. They demand their place as social agents, emphasizing the power found in their way of life, in the collectivization of their life experiences, artistic productions, and the insurgency of citizenship (Holston, 2008). What Welfare State can we build for what notion of citizenship? How can we incorporate new political subjects in the coalition that propels the universalization of social protection? What are the strategies used for its dismantling? What institutional, cultural, and political weaknesses are taken advantage of to process this dismantling? How can we envision a reclaiming of a project that builds an organized democratic society that prioritizes a type of social justice that materializes itself through social processes of recognition, participation, and social redistribution? To what extent can the Welfare State theory, albeit Eurocentric, be useful to identify the conditions of emergency and expansion of social protection in addition to helping us identify its weaknesses and vulnerabilities to the policies of dismantling in the late-blooming democracies of dependent capitalist economies? Despite their predominantly classificatory nature, do the social protection studies carried out in Latin America allow us to elucidate a few of the singularities and possibilities of the Welfare State in the region? Did the changes experienced by capitalism in the central economies in which the Welfare State is an established reality bring about a set of irreversible changes in the productive process, in the structure of the labor market, and in sociability which, along with the austerity policies implemented, emphasized tensions and possibilities of dismantling well-established systems of social protection? Do resilience, dismantling strategies, the differentiation in the policies adopted and which have become the focus of the latest literature allow for greater convergence with the Latin American situation? To what extent do they allow for a better understanding of the regional factors of resistance or retreat in social policies? The search for answers to these questions imposes upon us the double task of plunging into the theoretical production that might enlighten the different possibilities, limitations, trajectories, and standards of social protection that make Latin American countries unique, with special emphasis on the Brazilian case, which will also be analyzed through different sectors of social protection in this book.

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The aim of this chapter is to revisit the theoretical production about the construction of the Welfare State as a factor that reconciles the capitalist economy with democracy, in addition to the tensions that currently present themselves as real possibilities of the dismantling of social protection and of the Rule of Law. We thus propose to compare the theoretical production that analyzes the differences and singularities of building a Welfare State in late-blooming democracies with economically dependent economies such as Brazil. Following this introduction, in which we question the de-democratization process and its consequences and ways to make social protection systems possible in such a scenario, we will examine the main issues and theoretical contributions that may support us in this investigative journey in the following sections: (1) Capitalist Development and Social Protection; (2) Nature of the State and State-­Society Relations; (3) Conditions for the Emergence of Social Protection; (4) Welfare Regimes or States; (5) Political Regimes and Reformist Coalitions; and in item (6) From Reforms to Dismantling. Our final considerations seek to advance the proposal of an analytical model that encompasses both the processes of change that aim for the universalization of social protection and those that defend measures that shrink and dismantle Welfare States. We also make a few proposals regarding the importance of designing new systems of social protection that can tackle the structural and cyclical challenges presented for Latin American democracies.

2 Capitalist Development and Social Protection Reconciling a capitalist economy—that has class difference at its very core—and the market’s self-regulation with measures of social protection was discussed by Polanyi (1980) as a result of society’s self-protection to the destruction imposed by capitalist accumulation. However, the historical process analyzed by the author in the British case showed the enormous difficulty for the two antinomic principles (Bobbio, 1992) that brought about liberalism—freedom and equality—to consolidate into a system of social protection as part of the same status of citizenship. In the same vein as Polanyi (1980), Marshall (1967) shows how this tension led to setbacks and opposition to the right to life regarding civil rights, in the episode that became known as the “second slavery” leading to the loss of rights, such as free passage, of those who lived under the protection of workhouses. Both authors, therefore, emphasize the historical and differentiated elements of citizenship, with the construction of citizenship always being unique and contradictory. It is, in actuality, a disparate and irregular event although, in the English case, each right was a step or a link toward others, as stated by Held (1999). That being said, it must be recognized that: As a legal hypothesis inscribed within the nature of the capitalist State, citizenship is a necessary mediation but an insufficient condition to explain the genesis and development of social policies. (Fleury, 1994, p. 43)

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An erroneous reading of Marshall’s work was predominant in Brazilian political science circles bearing the assumption that the chronology and logic of the sequence described for the English case—when inverted among us and beginning with social rights—would not have reinforced democratic convictions (Carvalho, 2003, p. 220). As per this notion, the disjunction between democracy and citizenship would lead to a pro-government, statist culture; to a corporatist view of political interests that would be compatible with the absence of society’s ability to self-organize. This would consequently consist in one of the factors for the weakening of democratic institutions, including here the system of social protection itself. Although the development of citizenship certainly changed the relationship between State, Market, and Society, no evidence justifies the theory that the impacts of the trajectories followed in each case had the conditioning effect of a permanent institutional frailty. The later development of German Bismarckian Social Security would deny any conditioning permanent effect of this trajectory. This interpretation uses the diagram proposed by Dahl (Dahl, 2005) to analyze distinct historical sequences leading to polyarchy, or democratic regime, in which the dimensions of liberalization and participation would meet. For the author, the path of liberalization would consolidate the power of oligarchies and the rules of their exercise guaranteeing stability to democracy, ensuring the opposition’s contest before the majorities are incorporated into the political game. The path of incorporation, on the other hand, in which participation precedes the consolidation of the rules of democratic competition among the elites of oligarchic power, would result in instability and the seizure of the majorities by authoritarian leaders. The limitation of a strictly institutional approach is that it ignores other crucial factors for the construction of distributist policies such as the stage of the development of capitalism, the characteristics and makeup of the working class, the nature of the state power pact, institutional capabilities, political culture, and the correlation of forces. The same path followed via a liberal route in Anglo-Saxon countries, such as England and the United States, brought about different results in terms of social protection. In the former, there was a transition to social democracy with the creation of universal social security systems beginning with the Beveridge plan (Beveridge, 1987). In the United States, on the other hand, even with advances in social protection brought about by the New Deal following the 1929 crisis, there has always been an attempt to reconcile individual equity with social adequacy. In other words, an attempt is always made to balance market freedom and the need for minimal equality (Fleury, 1994), supporting meritocratic and individualist values in addition to ensuring that lucrative businesses participate in providing social services. In Latin America, the incorporation of majorities into the economic and political dynamics was addressed in functionalist approaches such as the theory of modernization from the heterogenous makeup of the working class, from the point of view of the lack of integration of the marginal masses arising from the rural-to-­ urban migration into the capitalist industrial dynamics. The theory of modernization (Lipset, 1959; Rostow, 1960) encompassed capitalist development from successive phases in which non-capitalist modes of production and reproduction would eventually be absorbed and incorporated into capitalist socioeconomics. Urban

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studies understood the existence of favelas and its residents as forms not adapted to the capitalist urban dynamics, a duality perceived as a near-extinct remnant of traditional modes of production and authority regimes. Historical structural studies have overturned this dual notion underlining the uniqueness of monopoly-dependent capitalism: In other words, we are not talking about two structures, one ‘modern’ and the other ‘traditional,’ ‘archaic,’ or ‘marginal.’ We are dealing with a single structural logic of the capitalist kind which simultaneously generates and maintains modes of insertion in the division of labor that are not typically capitalist and that, far from being a dead weight, are essential elements of the process of accumulation. (Kowarick, 1981, p. 61).

The concept of informality starts to occupy critical sociological production to analyze the inclusion of workers in the production process where the payment of wages was not very widespread. According to Machado da Silva (2002, p. 8), the formal-informal dichotomy found its main support in the ideal of European social democracies, with the protection of labor institutionalized on universalist bases. In the Brazilian case, the ambiguity persists due to the formal existence of universal civil rights, and political and social rights that, although restricted, are not realized for a significant portion of workers where relationships of violence prevail, for instance, in the treatment given by the police to the residents of favelas and urban peripheries. Reis (1988a, 1988b) points out that beyond the persistence of inequalities that could be mitigated with the existence of social policies, not extending the full scope of citizenship to the entire population or extending a “second class citizenship” to the lower “castes” precludes the feeling of social equality, inhibiting the possibility of comparability and interchangeability that is intrinsic to democratic capitalism. In this sense, the expansion of citizenship is a process that involves both recognition and redistribution (Fraser & Honneth, 2003) beyond a merely legal dimension. The equalization that is inherent to the condition of citizenship is a political and legal construct that overcomes differences. It settles itself in the social conditions upon which subjects are formed and relationships of social reciprocity are established as well as in the material conditions that reduce the inequalities that are considered unjust by whatever degree of civilization that has been attained in each society (Fleury, 2003). It is, fundamentally, a cultural process of struggle for hegemony that fulfills itself politically, legally, and materially. In the absence of such conditions, where extreme social, economic, and political asymmetries prevail, a dissociation takes place between the modernity of the State—expressed in the legal norm—and the conservative tradition that governs the dynamics of social relations and repeatedly sabotages the construction of the nation (Da Matta, 1988).

3 Nature of the State and State-Society Relations Different authors analyzed the subject of the transition into capitalism highlighting its consequences for the relationship between State and Society, and thus mapping out the possibilities and limits of the development of social protection. Terms such

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as Prussian Path or American Path in Lenin, Jacobin Revolution, Passive Revolution or Revolution/restoration in Gramsci, and Conservative Modernization in Barrington Moore deal with the differences between transitions into capitalism. They are related to the set of factors that gave rise to the modern State and to the political community, such as the development of productive forces, position within the global economy, class structure, the correlation of forces, the direction taken by the process of social change either hegemonically or via state forces, etc. The processes of State and Nation-building involve both the construction of a central state authority as a legitimate order, or “stateability,” while the nation establishes itself in a process through which reciprocal rights and responsibilities gradually are redefined and expanded, inserting the masses into the community of citizens (Bendix, 1964). Bendix creates a general proposal that points out not only the State–Society relationship that results from different transitions, but also the set of liberal or conservative values involved in these processes: In those places where industrialization is the work of a nascent business class, it is likely that such a class will seek social recognition from groups of rulers while their ideas and economic activities challenge many aspects of the traditions of these groups… When industrialization takes place in a country with a centralized and autocratic regime, the business class will seek recognition of its economic activities from the government especially in the form of privileges that will smooth out its activities. (Bendix, 1966, pp. 21-22)

As a result of the relationship between State and Society, we find distinct clusters of variables in which different variations combine to form ideal types or social protection modalities that are distinguished by ideologies and values, effects on social status, financing and actuarial-financial management, coverage, types of benefits and conditions of access to these, forms of administration and organization, denominations, and historical references. The ideal types related to social protection modalities found are Assistance— where the liberal ideology prevails in the organization of relations between State and Society—Social Insurance—where corporate ideology triumphs, and Social Security where the configuration of a new relationship between forces ends up making room for social democracy, organizing public and universal social protection under the aegis of social justice. The main contribution of our typology—which is similar to others—is to realize that such combinations of variables have a profound sociological impact on the constitution of the different forms of corresponding citizenships: inverted citizenship (Fleury, 2014a, 2014b) like in the traditional care modality, in which social protection takes on a discriminatory and punitive character, protecting society from the risks caused by those who failed in the market. Regulated citizenship (Santos, 1979), on the other hand, takes place through the distribution of benefits solely to workers inserted in the formal labor market, as in the case of Social Insurance. We only find universal citizenship, in the Social Security modality, with benefits being disconnected from financial contributions and need-based access. In other words, citizenship is the result of a unique historical construction, although its development can be configured as an expression of a given form of social protection. In turn,

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social policy is also a factor of reconfiguration of all those economic, social, cultural, ideological, and political variables that gave rise to it. Social protection systems change the weight of economic and social agents and the balance between State and market. They define inclusion and exclusion criteria in the community of citizens, reinforce stratification patterns or mitigate disparities, preserve status or discrimination, and can also favor social mobility. In this manner, social policies are constantly redesigning the composition of the social structure in terms of the distribution of power and resources (Fleury & MOLINA, 2002). To understand the form taken by the State in Latin America, scholars have pointed out economic dependence and subjection to the interest in reproducing international capital as factors responsible for the structural heterogeneity of the labor force and the predominance of the political sphere in unifying the social body, necessary for domination. In other words, social interests are neither constituted nor disputed predominantly in the sphere of society, but rather within the State. The predominance of the political sphere is also its weakening—trapped in a web of self-interest, this implies a non-legitimized political order and oligarchic dominance that will entail the recurrent use of violence against popular sectors to maintain their permanent exclusion. The construction of nation and State in the region did not follow a sequential and resolutive process of the issues of unification, integration, participation, and distribution. Quite the opposite, their simultaneous presence as challenges demand partial and inconclusive solutions that result in a hybrid institutional political system with staggered levels of overlapping structures in varying shades, which do not overcome, but amalgamate, in inconclusive processes of transition. Analyzing the Brazilian situation, Florestan Fernandes (1976) points out that the crisis of oligarchic power did not bring about its collapse, but a reconfiguration of the power structures that would shape bourgeois domination, being that the bourgeoisie did not create its own institutions of social power, which unified bourgeois domination at a political level. In the periphery, the viability of capitalism is thus conditioned by the political milieu, implying a “strong programmatic dissociation between capitalist development and democracy” (Fernandes, 1976, p.  292), “converting the national, democratic State into an instrument—pure and simple—of a preventive class dictatorship” (Fernandes, 1976, p. 297). In Brazil, the modern State conducted the import substitution process dependent on the surplus of agricultural export products, having bourgeois domination as a result rather than a breaking point with the traditional oligarchic order with which it was associated, preserving traditional values and authoritarian power structures. This process of conservative modernization restricted labor and social rights to formal urban workers, aiming to link them to the state apparatus as corporate privileges, in a stratified and fragmented structure. Fragmentation is an outstanding characteristic of social protection in Latin America. Among the initial studies on the development of Social Security in Latin America, the polarization between pluralists and elitists stands out, represented, respectively, by Mesa-Lago and James Malloy. Mesa-Lago (1978) attributes to the strength of pressure groups the differential access to public resources, resulting in a stratified

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and fragmented institutionalization of social protection, while Malloy (1986) sees the same result as a consequence of state bureaucracy power to coopted organized workers. While the former sees social protection policies as a result of pressure from organized sectors of society, the latter understands it as a state response to the problems of cohesion and integration by political and technocratic elites. Although both proposals can offer good explanations for different cases, such as pressure groups in Argentina and state bureaucracy in Brazil, they end up being more descriptive than explanatory, as they leave out of their approaches the inability of States to place themselves as a universal equivalent—a legal, generic, and abstract power, capable of ensuring universal redistributive policies. To treat public policy from the emergence of the social issue is to avoid traditional models that see the State as a black box in which actors insert their interests, or, rather, those who consider agents of state bureaucracy demiurges who create policies from a rational logic, in a context of scarcity from which they must make tragic choices (Fleury, 2011). It is my belief that the emergence of the social issue presupposes a new correlation of forces, weaving around it a social fabric capable of inserting it into the public agenda. That is not to say, however, that once set in motion, those who demand it can be certain that it is addressed and much less sustained. In other words, policies must be analyzed as part of the struggle for hegemony and expansion of the State, which presupposes the constitution of political subjects and a change in the relationship of forces, responsible for circumscribing the state’s coercive nucleus with measures that meet popular political demands and ensure the legitimacy of central authority. In analyzing social protection in Latin America, we seek to understand public policies as a mediation between the State and society, allowing us to understand the place that this policy occupies within its apparatus and in the reproduction of the different social sectors it affects. Thus, through the development of social protection structures, both the nature of the State and its dynamics of institutionalization are revealed. Since social protection is a public policy, one of the immediate consequences is to analyze the benefits from its constitution as rights inherent to the condition of citizenship, or as infralegal measures devoid of political status. Full participation of individuals in political society occurs from their insertion as citizens, which stems from the recognition of their needs as demands that society and the State must address through social policies. The differentiations between state capacities 1 (Skocpol, 1985), (Cingolani, 2013), the breadth of benefits and coverage, and the institutionalization of social protection in Latin America resulted in both from the constitution and nature of the bloc in power, from its success in conducting the economic development model through import substitution, and from the homogeneity of the working class, capable  Skocpol (1985, p. 9) defines state capacity as whether a State is able to “implement official goals, especially over the actual or potential opposition of powerful social groups or in the face of recalcitrant socioeconomic circumstances.” Skocpol, T. (1985). Bringing the State back in: strategies of analysis in current research. In Evans, P. B., Rueschemayer, D., and Skocpol, T., editors, Bringing the State Back in. Cambridge University Press. 1

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of assuring it a greater scope in the competition for public funds. However, even in countries where a denser process of industrialization took place, as in the Southern Cone, social protection maintained the striking characteristics of stratification combined with different levels of exclusion, since the fragmented model of social security protection prevailed until the 1970s, restricted to workers inserted in the formal labor market and with a marked differentiation between protected workers. The option of protecting workers included in the formal market in societies with varying levels of informality also defines the degree of exclusion in each case. Studies on social protection in Latin America generated different classifications according to the criteria and the countries studied, highlighting their main characteristics: Mesa-Lago (1978) underlines the moment of the introduction of protective policies and emphasizes the common characteristic of stratification; Filgueiras (2005) introduces outcome indicators and adds the degree of exclusion to stratification; Martinez- Franzoni (2008) adopts the notion of welfare regimes and draws attention to the role of families in social protection; Segura-Ubiergo (2007) proposes the creation of a welfare effort index. The different classifications proposed are grouped by Steffen and Côrtes (2018) into three axes: studies that focus on social coverage and spending, a second group that emphasizes the mix of public and private organizations in social protection, and a third that focuses on state capacities in the provision of social protection. In short, an effort has been made to develop typologies that have varied over time, which in some cases overlapped, but which often take different countries and consider varying aspects making comparability a systematic absence. They also differ methodologically from typologies elaborated from historical analyses, which gave rise to the construction of ideal types, being more of a classification created from nominal categories and/or numerical indicators—leading Gómes (2020) to conclude that such studies explain well “how” social protection systems in the region are, but not “why” they are as they are. Essentially, social protection policies should be viewed as a metapolicy in the sense that they materialize the competition for the distribution of public resources, shape the extension of the community of citizens through inclusion and exclusion criteria, and redefine social stratification and relations between social forces and public and private agents.

4 Conditions for the Emergence of Social Protection The compatibility between mass society and market economy was also treated by Offe (1983) as a consequence of the gradual development of two mediating principles, namely, mass political parties, and the Keynesian Welfare State (KWS), which represented, on the one hand, the commodification of politics and, on the other, the politicization of private economy. However, the constitutive contradiction of capitalism between the socialization of production and private appropriation

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remains, and the compatibility between mass democracy and market economy only happened under certain conditions, which allowed redistributive policies. The strategic intent of Keynesian economic policy is to promote growth and full employment, and the strategic intent of the Welfare State is to protect those who are affected by the risks and contingencies of industrial society, and to create a measure of social equality. This latter strategy is only feasible if the former succeeds, providing the necessary resources for social welfare policies and limiting the scope of demands related to these resources (Offe, 1983, p. 378).

In other words, it is about organized capitalism that, in de-ideologizing party politics and politicizing the economy through state regulation, ends up undermining the bases that allowed compatibility itself, raising the central contradiction to a whole new level. It is, therefore, a historical construction, based on specific economic and political conditions, capable of introducing new contradictions in proving itself inadequate to meet new emerging demands. The Welfare State is considered a peculiar dealing of distributive conflicts, particularly the conflict between market logic and the principles of political allocation, embedded in the institutional arrangements of each society’s social policies. New coordination between the State, the market, and citizens, in which the State takes on the role of regulator of productive relations and establishes the material bases of redistribution through fiscal impositions as per the set of rights attributed to the community of citizens. In this sense, conflicts move from the sphere of production to the sphere of reproduction with some degree of reproduction decommodification (Esping-Andersen, 1990). The Welfare State was responsible for forging new ties in complex societies and for creating an institutional pattern of redistributive conflict resolution, laying the foundations for cohesion and social integration. For some authors, the Welfare State can be seen as inherent to modernization processes. It has been considered the most persistent structural component of such modernization processes by Wilensky (1975) and a response to the disorganization of social relations brought on by the industrialization and urbanization processes (Rimlinguer, 1971), being the result of both economic growth and demographic changes. In this sense, it could emerge under any condition in which modernization took place, as a result of the factors mentioned. Other authors such as Flora and Alber (1981), however, see the WS as the result of a concrete historical situation. And, being a European invention, in the same way as the national State, mass democracy, and industrial capitalism. The chain of reasoning is easy to follow: industrialization, a great populational change taking people from the country to the city, a rupture of traditional ties and networks of solidarity and integration, large productive units, and the creation of relatively homogeneous groups of workers, mobilization, and organization of the new working class, the evolution of mass democracy with the creation of workers’ and socialist parties, increase in labor productivity and accumulated wealth, the consolidation of a state bureaucratic body and mastery of administrative techniques, increase in state intervention and creation of redistributive mechanisms through social policies, and institutionalization of industrial and redistributive conflict.

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Despite the differences, common points explain the emergence of the WS: processes of industrialization and urbanization, the increase in economic productivity, changes in social relations, the relations between social forces, the role of the State in regulating the market, and in the decommodification of social protection. However, not every process of modernization has the same political and cultural components, which would explain variations in the structuring of social protection. Some authors, which we will explore below, will analyze the political component of the social-democratic arrangement and the WS more closely, with special focus on the basic notion of the interclassist social pact. Combining structural and political components in its historical analysis, the conditions for the emergence of organized capitalism find in Polanyi the assertion that state planning was a spontaneous reaction of society—a double movement to counter the destruction brought on by the implementation of the liberal principle of market self-regulation. The collectivist reaction is seen as a general interest from society, even if the results were influenced by the interests of the classes involved (Polanyi, 1980, p. 164). The idea of an interclass pact as a historical construction of social democracy is defended by Przeworski (1989), for whom class commitment, when defending collective well-being in an electoral competition, causes the undermining of the workers’ organization as a class, leading workers to seek economic gains to the detriment of more radical strategies such as the destruction of private property. Even though workers do not have a legal right to the product as immediate producers, as citizens they can obtain such a right via the political system. Moreover, once again as citizens and not as immediate producers, they can intervene in the organization of production itself and in the allocation of profits. (Przeworski, 1989, p. 24)

Contrary to the prospects of a spontaneous interclass reaction or the result of rational calculation, Therborn (2014) states that class politics has been a central element of European political modernity establishing a clear connection between the struggle of trade unions and well-being. He states that social rights are fundamentally the outcome of the working class’s strength and of the fear it inspired and not as a result of social pacts. The two founding movements of social welfare in Europe, the Bismarck period, from the 1880s to World War I, and the Beveridge Era, from the end of World War II to the 1950s, owe nothing to social pacts. Neither does the decade of great expansion, from the early 1960s to the early 1970s, characterized by such pacts. They all adhered, each one in their own way, to the paradigm of governments as administrators of the economy and society. (Therborn, 2014, p. 135)

Instead, he states that recent European pacts are agreements of social exclusion and adaptation to the market, under the aegis of austerity policies, even if they apply to consolidated Welfare States. In Latin America in recent decades, ECLAC (CEPAL, 2010) and Hopenhayn, 2014 have emphasized the role of social and fiscal pacts as a condition for overcoming regional inequalities. They seek to disseminate a medium and long-­term vision that will allow building sustainable conditions to finance poverty and

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inequality-reducing policies and programs while fully ensuring economic, social, and cultural rights. They assume that broad, sustainable political agreements can be reached that will ensure the continuity of national policies capable of materializing the guiding principles of equal access without exclusion or discrimination; the progressive universalization of care joining universal approaches with selective affirmative actions; the solidarity of financing with redistributive progressivity and intergenerational solidarity; co-responsibility between men and women, between families and society (Hopenhayn, 2014, p. 44). In a study commissioned by ECLAC, Franzoni and Sánchez-Ancochea (2020) analyze different pacts considered stable and lasting—Guatemala, Costa Rica, Colombia, Sweden, and Chile—seeking to identify catalytic factors that favor agreements deemed significant. These are economic crises and social dissatisfaction; the role of the State and state capacities; the role of the economic elite and social movements in the correlation of forces, but also how problems are framed and how long-term commitments are built. For the authors, there were agreements and commitments in all the selected cases, involving peace agreements, inclusion through the universalization of health care, forging a political coalition, or the Welfare State itself. Nevertheless, and despite the differences regarding the cases studied, we can argue that the only case in Latin America of a lasting and comprehensive agreement that resulted in social inclusion is Costa Rica. Another country often remembered for its inclusive policies, Uruguay, has social protection less dependent on social pacts than on permanent popular consultation on public policies. But even in these two countries, austerity policies have recently already jeopardized redistributive agreements and policies, increasing social inequality. In the case of Brazilian capitalism, O’Donnell (1988a, b, p. 57) drew attention to an astonishing economic dynamism combined with enormous social inequalities and extremely archaic and repressive standards of authority—including the ties that bind State and society and the various classes and social sectors together. He highlights the great capacity for accumulation and productive modernization of capitalism, based on repressive relations of exploitation and domination; highly authoritarian political actors who control public resources; a bourgeoisie that is strongly connected to the state apparatus with the absence of a republican culture; a strong slaveholding heritage that permeates political culture and depreciates workers; the abundance of labor, heterogeneity, and disorganization of the Brazilian working class. He then concludes: In this sense, the relative absence of the working class as a reasonably autonomous socio-­ political subject defines the particularity of the historical way of being of the Brazilian bourgeoisie: a class that achieved economically important successes, but that was constituted as a deeply authoritarian socio-political subject—as were all the bourgeoisies until the growing organization and political presence of the working class led them to the path of democratizing negotiations and concessions. To my knowledge, there is no other case in history of such an economically successful bourgeoisie, which has been so little challenged— both socially and politically. (O’Donnell, 1988a, b, p. 76, emphasis added)

How can we discuss social pacts when all the conditions for such are absent? The development of a culture of democracy depends on the establishment of political

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actors able of developing ways to organize and assure strategic resources that allow them to be included in negotiation and agreement processes. It also depends on the state's capacity to collect taxes progressively and to implement distributive policies, ingrained in an economic model capable of generating surplus sustainably and aimed at expanding the national market (Fleury, 2014a, 2014b). In this sense, the advances in social protection consolidated in the 1988 Brazilian Federal Constitution cannot be seen as the result of a social pact, but of a critical juncture in which social forces were able to impose a standard of social rights that met the expectations of society’s great mobilization, but that was not supported by the establishment of a progressive tax system able to sustain universalist redistributive policies.

5 Welfare Regimes or States According to Miles and Quadagno (2002), since the late 1970s, the prevailing literature explains the diversity of WSs taking into account the analysis of class relations, the actions of political parties and institutions instead of considering them an inexorable product of industrialization, combined with the imperatives of accumulation and legitimation. “Politics Matters” was the motto of the approach that became known as “Power Resource Theory” (PRT). PRT studies identify the distribution of power between left-wing parties based on labor organizations and left-wing parties, on the one hand, and center and right-­ wing political forces, on the other hand, as responsible for the size and distributional impact of WS across countries and over time (Huber & Stephens, 2012). They emphasize the importance of democracy so that workers can organize themselves and left-wing parties can compete for the electorate—essential factors for strengthening their power resources and changing the correlation of forces. Authors such as Korpi, Stephens, Esping-Andersen, and Palme are seen as proponents of this current. These and a plethora of later studies in this tradition … supported the conclusion that major differences in welfare state spending and entitlements among the capitalist democracies could be explained by the relative success of the left parties, particularly Social Democratic parties, aligned with strong trade unions in shaping the democratic class struggle. (Miles & Quadagno, 2002, p. 38)

Another approach to politics places emphasis on institutions, as a reaction to the view of politics solely as a class and party struggle in society. Theda Skocpol and Peter Evans et al. (1985) brought the State back into political analyses and Immergut (1992) complexified the analysis of the PRT by analyzing the constitutional dispersion of power, which is to say, the isolation of the executive in relation to parliament. It was thus demonstrated that the effect of electoral pressures will depend on the institutions that are configured as veto points. In other words, struggles for power are framed and depend on the trajectories and institutional relations that materialize in veto points, stifling the possibility of political action.

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Esping-Andersen (1990) assigns a prominent role to politics and political institutions, defining different arrangements between State, Market, and Families, which constitute different welfare regimes, with different degrees of decommodification of social reproduction. The differences between WSs were seen in their typology— Liberal, Corporatist, Social-Democratic—not only from the perspective of public spending and guarantees of ownership, but as different organizational logics of the relations between State, Market, and Families. WSs differ not only in the way they redistribute resources and respond to the inequities generated by the market but also in the ways they regulate primary distribution by guaranteeing wages and jobs—in other words, by regulating the insecurities that the market might generate. By shifting the notion of Welfare State to that of Welfare Regime, he seeks to capture the rules, institutions, and structure of interests involved in social protection, which are not always dictated by the predominance of the State. Even if the concept of decommodification was the most prominent in this typology, the notion of the State regulating the insecurities generated by the market is extremely powerful in analyzing social protection. In trying to apply this approach to analyze social protection in developing countries, Gough and Wood (2004, p. 33) distinguish three groups of welfare regimes: “welfare state regimes, informal security regimes and insecurity regimes.” The authors justify the adoption of the notion of regimes to refer to repeated systemic arrangements through which people seek security for their lives and their families. In this manner, assuming that the poorest countries and regions do not achieve the right conditions for a Welfare State regime, they move away from the notion of rights and ownership seeking other security arrangements. In the informal security regime, they identify a set of conditions in which people cannot reasonably expect to meet their needs by accessing state services or through the market, depending on family and community relationships to do so instead. This approach decentralizes and decolonializes WS studies since it breaks away with the structural link that ties the development of social protection to the original process of industrialization. Paraphrasing Bendix (1974, p.  75), industrialization only began once, with England being more of an exception than a model. However, in creating other more inclusive categories for economies and late-blooming democracies, a theoretical slippage takes place bringing about a gap between social protection, social policy, and social rights. In adopting the notion of security in the provision of basic needs, we can see the importance of family, community, and other social organizations to ensure the survival of the poor. This negates the generality of the ontological presupposition (Gough & Wood, 2004, p. 3) of social policy and social policy studies linked to the role of the State as collector, regulator, and provider, limiting it to a specific form of Western social policy. Although they use the Esping-Andersen terminology of Welfare Regimes, they replace the pillars of decommodification and regulation for systemic safety arrangements. Otherwise, influenced by the work of Amartya Sen (Sen, 2000), they seek to base social policy on basic needs, as those universal preconditions that allow such participation in the form of life. Gough and Wood (2004, p.  17) identify these preconditions as being physical health and autonomy. As for intermediate needs,

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these are the infinite variety of conditions that allow us to increase physical health and autonomy. In the same school of thought, other authors define dignity as the bedrock of development, comprising the values and rights related to justice, freedom, and life. In this manner, they link development to the sustainability of well-being, economic sustainability, and environmental sustainability (Castell & Himanen, 2014). Studies on the “Non-State Social Welfare” policy (Cammett & MacLean, 2014) highlight the political results of several societal social protection initiatives on state capacities, accountability, and access to social services (welfare). However, they point out that despite its enormous diversity, non-state provision can generate inequality in access and reinforce inequities and differences making the rendering of accounts more obscure and complex in addition to affecting the development of state capacities. The importance of the study is to draw attention to a phenomenon that generalizes and presents great geographical variety, a high level of fragmentation and raises concerns about equity, sustainability and predictability, coordination, and planning. The most important issue is that, by abandoning the centrality of the State, this theoretical framework also discards citizenship, in other words, the political and legal ties that are established with those who make up the community of citizens, based on a civilizing standard established nationally and ensured by the State. There is thus a detachment between ethical principles and the material and social basis of the construction of social policies as part of the processes of building the nation, the State, and the community of citizens (Fleury, 2015). In this manner, they introduce greater flexibility and breadth in the inclusion of various forms of social protection, losing, however, the political framework that allows us to understand such policies and actions as something other than the provision of services—but as norms and institutions understood as common, public, universal, non-profit, non-partisan, and non-clerical goods. Such arrangements are incapable of creating political bonds in terms of rights and duties, social status in relation to recognition, and impersonal bonds of solidarity, indispensable to the imaginary of social cohesion. In Latin America, Franzoni (2008) defends applying the notion of regime rather than that of the Welfare State, since it unveils the role of the family and, in particular, of unpaid female labor in social protection. In a region where people’s well-being is deeply embedded in family relationships and is frequently more dependent on female unpaid labor than on public policy, closer attention to how social structures interact with public policy has not only academic interest but policy implications: policy change could improve welfare regime ‘architectures’. (Franzoni, 2008, p. 67)

In her work, the author reaffirms that the vast majority of the population in the region relies on family and community strategies and not on access to the formal market or to public policies. She seeks to demonstrate that the arrangements between State, Market, and Families have political implications in terms of interactions, trends, and strategies of decommodification, commodification, and de-familiarization of social protection. The importance of bringing the issue of gender to light in social policies—both in terms of unpaid work and of the interactions between protection based on family

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relations and cash transfer public policies—cannot, however, obscure the political nature of the links between beneficiaries and the State so that the mix that prevails in the region can be identified. The issue here is asking ourselves to what extent public policy matters in reducing inequalities and promoting citizenship. The study done by Arza (2015)—considering non-contributory pensions from a gender perspective—concludes that pension system reforms that increased the contribution period harmed women because they commonly have intermittent trajectories in their work life. On the other hand, reforms that established minimum floors and expanded non-contributory pensions favored women and men with informal jobs. However, when the cash amount of non-contributory pensions is not linked to a standard such as the minimum wage, they tend to be insufficient. If cash transfers are not inserted within an architecture of rights and guarantees, they tend to be weakened and go unfunded in recessive scenarios. The informality of policies and programs for informal workers and for unpaid work is one of the features that restore, through social policies, insecurity, non-­ requirement, financial vulnerability, and lack of state capacity. For these reasons, Cecchini and Martinéz (2011, p. 82) emphasize the importance of social protection in Latin America having advanced in the recognition of social rights and legal and constitutional guarantees, although such recognition has not always been translated into concrete policies. They divide the focus of social protection in Latin America into three groups: protection as assistance and access to promotion, non-contributory, and focused on the poor; an intermediate position between assistance and access to promotion and citizen guarantee, where a connection between focused transfers and universal policies is sought; social protection as a guarantee to the citizen, with transfers and non-contributory benefits and increasing links between contributory and non-contributory policies with integrated social protection systems. Corroborating the importance of legal guarantees to social protection, we observe that a consequence of the enforceability of rights in a context of strong economic restrictions has been the exponential increase in judicialization in the domain of social rights in the region, even if access to justice will introduce new factors that reinforce previous stratifications and power resources (Fleury et al., 2013). Another consequence of the disjunction between social rights and social benefits is that a coexistence between a formal and an informal system of social protection comes to pass. Rights without benefits—such as the lack of access to health services—coexist with benefits without rights—such as in care programs not guaranteed as rights (Fleury, 2014a, 2014b)—weakening the entire architecture of social protection, since holders see themselves at permanent risk and vulnerability.

6 Political Regimes and Reform Coalitions Comparative studies of the Welfare State’s different trajectories and architectures have sought to build theoretical arguments that can explain these differences while also allowing for comparisons that involve regions such as Latin America, Asia, and Africa. Haggard and Kaufman (2008) identify three sets of factors to be considered

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in comparative analyses: a) the significance of redistributive coalitions and economic interests, b) the performance of the economy and its organizations, c) political institutions and regimes. Redistributive coalitions and economic interests follow the PRT, trying to see to what extent the elites have incorporated or excluded the organizations of urban and rural workers, in such a way that a web of actors and interests can be formed around social policies. The performance of the economy, on the other hand, defines the fiscal capacity of the State, and high growth is a condition that allows for an increase in social spending and coverage. The regime and political institutions directly influence social policies, allowing or not party competition and the organization of interest groups—even if a merely institutional approach closely bound to the rules of the game is a limited explanation. They maintain, however, that economic conditions and the legacy of social protection strongly influence how democracies deal with conflicts. In their conclusions, Haggard and Kaufman (2008, p. 24) relativize the assertion that democratic systems have mechanisms that encourage redistribution and, consequently, broader, and more generous welfare systems. They argue that in situations of economic constraint and pressure from interest groups, these expectations are not fulfilled. In specific circumstances, however, authoritarian regimes may produce distributive effects. They then conclude that, having been created in line with the ISI model, social policy in Latin America was deeply disorganized when this pillar gave way to privatizations, international competition, and economic restructuring. They fail to consider, however, that economic growth in Latin America neither represented greater fiscal capacity nor greater distribution through cash transfer policies or social services. Whether due to the low tax burden and/or its concentration on taxing consumption rather than assets and wealth, Latin American countries distance themselves from those of the OECD and the European Union, in which market inequality is greatly mitigated by transfers and services offered by the State (CEPAL, 2015). Huber and Stephens (2012) identified power clusters that would explain the development of social protection in developed countries: The first cluster of power is the balance of domestic class power and party-political power, which is the core explanatory factor in the power resources theory of the welfare state variations in advanced capitalist democracies. The second cluster of power is the structure of the state and state-society relations. The third is transnational structures of power, the complex of relations in the international economy and system of states. (Huber & Stephens, 2012, p. 4).

The adaptation of this approach to the Latin American context required understanding that democracy—even if it is considered by the authors as the single greatest determining factor of egalitarian social policy—is a variable, but not a constant in the region. Unlike European countries, the state capacity variable proved to be crucial for the development of social policies in the region. The State-society relationship also depends on the political regime, since in authoritarian regimes the State gains greater autonomy and ends up co-opting the working class when it has sufficient pressure. Lastly, they considered that the third power cluster—the transnational power structure—has become the most important in Latin America since the 1980s debt crisis.

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One cannot deny the importance of comparative studies that seek to adapt the theoretical framework used to analyze the emergence and expansion of the WS in European countries to a situation like Latin America’s, which differentiates itself through economic, political, and social characteristics. We must, however, consider the existence of enormous differences in the region’s countries’ economies and societies, making it quite imprecise to use the same broad concept to designate Latin American social protection. Classifications such as Barrientos’ (2024), that identify a conservative-informal welfare regime for the region before reforms and a liberal-informal one after them, seem to have little explanatory ability since they are applied to economically, politically, and socially distinct realities, including the scope of social protection, institutional capacities and degree of exclusion. For this reason, reforms such as the ones in Chile, Brazil, and Colombia would be analyzed within the same typology in his classification. As we seek to demonstrate in the next item on reforms, this general trend must not obscure crucial political differentiations between them. The typology created by Filgueiras (2005), although limited to the study of some countries in the region, is adopted by Huber and Stephens (2012, p. 16) because it allows better differentiate and then group countries not only in relation to coverage and social indicators, but also in relation to class structure. Thus, stratified universalism would be the result of rival elites seeking popular support, with dualism being the result of the elites building a mechanism of cooptation accompanied by repression of the working class, and exclusionary regimes being a product of predatory elites. Going beyond the merely descriptive, however, we would still need to examine what might explain such power relations in each case. Linking the emergence of social protection in the region to the ISI economic model cannot be applied equally to countries with such disparate industrial developments. In the Brazilian case, despite its peripheral condition and late industrialization, the country achieved a transition from exporting economy to incomplete industrialization, managing to transition from restricted to heavy industrialization (Mello, 1982). The position of a trade-oriented economy in the international context may be the explanatory variable for the early origin and generosity of social protection in Argentina and Uruguay, allowing for a greater homogeneity in both countries’ working classes, in addition to both governments being committed to the universalization of education. There is no immediate correlation between the degree of industrialization and the social protection model, given the uniqueness of the Brazilian case, which went from being an exporter of agricultural goods in 1930 to becoming the world’s eighth industrial economy in 50 years without there having been, in this period, a significant change in the breadth of the country’s social protection or in the reduction of its inequality. In the same way that import substitution industrialization (ISI) cannot be assumed as a constant marking of social protection in the region as something direct and linear, the discussion about the relationship between political regime and social protection must also be nuanced. Huber and Stephens state that by allowing greater dispersion of power, formal democracy opens possibilities for the emergence and action of actors such as left-wing parties that are committed to redistribution and for

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party competition based on promises of improvement of social policies, leading governments to respond to the pressures of citizens (Huber & Stephens, 2012, pp. 11–21). However, Santos (1979), translates a near-consensus that prevailed in Brazilian political analysis until the 1988 Federal Constitution that associated the expansion of social protection with authoritarian governments: It is an important fact, however, that in Brazilian evolution the periods in which effective progress can be observed in social legislation coincide with the existence of authoritarian governments. The two noteworthy periods for Brazilian social policy can undoubtedly be identified with the revolutionary government of [Getúlio] Vargas and the post-1966 decade… The former was characterized by the relationship between power and the public through the regulated extension of citizenship. The latter is characterized by the recess of political citizenship, in other words, by the non-recognition of the right or ability of societies to govern themselves. (Santos, 1979, p. 123).

One of the first authors to question the compatibility of democracy with the WS in the current phase of capitalism, Offe (1989) criticizes the arguments of institutional inertia, whereby it is assumed that the WS creates its own source of political support, in part through the expansion of the number of beneficiaries, in part through ideological complacency. Such arguments presuppose rational action on the part of all actors involved, which is not expressed in the defeats of social-democratic parties in several European countries, nor in the decline of WS budgets, and much less in the lack of benefits to meet the needs caused by rising unemployment. It also points to a set of social transformations that mobilize groups around conflicts that lie outside the sphere of the WS—such as environmental, feminist, and pacifist issues. Finally, the predominance of libertarian, anti-State, and community values undermines the foundations of the ideology that sustained the WS, with its egalitarian-collectivist component. Democracy provides a greater opportunity for individuals to opt for non-cooperation, leading the author to then conclude: “if the democratic State is a Welfare State, this does not happen due to democracy but in spite of it” (Offe, 1989, p.  297). The production of public goods, including the State itself, requires an underlying notion of similarity and collective identity for individual agents to move from an economic paradigm to a sociological paradigm of mandatory and normative order. It is difficult to place such a large weight on political regimes in the construction of social protection in the region. After all, if there is one striking characteristic in Latin America, it is political instability, with authoritarian governments, coups d’état, dictatorships, and restricted democracies taking turns. Likewise, one may question state capacities since a truncated statehood has predominated in the region with entire areas of the territory where the legality of the State does not fully apply. By pushing its populations to conditions of illegality, the State generates what O’Donnell (1984) called low-intensity citizenship, with the author deeming those who show no responsibility toward their citizens “delegation democracies.” In the absence of open party competition, left-wing parties have spent most of their history acting underground, without massive penetration to build public opinion. Oligarchic democracies such as Colombia and Venezuela have managed to maintain themselves

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afloat for many years through restricted party competition among elites and a high degree of social exclusion. For O’Donnell (1988a, 1988b), even the transitions into democracy in the Southern Cone, which inaugurated democratic regimes in the last quarter of the twentieth century, deserve to be differentiated as transitions through collapse—as in the case of Argentina—or through pact, as in the case of Brazil. The transition through collapse stems from the degree of economic failure and the high cost of widespread political repression; in the transition through pact there was greater economic success and less repression. The kind of democracy that is ushered in in a collapsed situation has fewer economic resources and greater political freedom. Through pact, on the other hand, economic conditions are better but the structures and prerogatives of the political and military actors of the dictatorship are preserved. Given the conditions of transition into democracy, we can consider that they will influence the coalition in power and economic capacity, limiting the possibilities and characteristics of social protection systems. The literature on social protection in Latin America does not interact with the production on the region’s political regimes, creating a pluralist bias as the only translation of democracy that could expand the action of actors committed to social protection. We agree with Hirst (1990, p. 31), however, when he states that there is no “democracy” in the singular. What there is, in fact, is a variety of doctrines and political mechanisms and so-called democratic decision-making processes. He also argues that a democracy where corporate organizations can compete and negotiate in association with the State can overcome several limitations of a representative democracy. Reis (1988a, b, p. 30), on the other hand, provocatively states his thesis that Brazil lacks corporatism, considering the need to overcome the stratification of citizenship and expand the WS for the excluded population, since this is nothing more than an institutional arrangement where corporate interests are inserted.

7 From Reforms to Dismantling The crisis of the ISI economic model marks the end of a period of construction and expansion of social protection in Brazil and in several of the region’s countries. The opening of economies, large public debt, the inflationary spiral, an uncontrolled opening of previously protected economies, and the low incorporation of technology and competitive capacity of the nationally located industry were all factors that impacted the region’s political scenario. As part of this process, the web of actors that had organized itself around systems of social protection, such as unions and state bureaucracy, saw its power dwindle. A period of great changes in social protection began in the 1980s and the region became a laboratory of innovative experiences stemming from reforms in the health and pension systems in the 1980s and 1990s and the Conditional Cash Transfer programs (CCTs) of the 2000s and 2010s.

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Even if it is common to say that politics matters, most studies on social protection in Latin America end up considering a single model of reform or standard of social protection from the exhaustion of the import substitution model as if there was no room for politics in such a context. Quite the opposite is true, in fact, as we were able to identify paradigmatic models of very distinct reforms, depending on the timing of the reform in relation to the two macrophenomena that impacted the region: the economic crisis followed by adjustment measures and the transition into democratic regimes (Fleury, 2000, p. 240). At the end of the twentieth century, we found that while the reform of the health system in Argentina came after the democratic transition and was concurrent with the economic crisis, it was concurrent with the democratic transition and prior to the economic crisis in Brazil. In Mexico, on the other hand, the reform was concurrent with the democratic transition and followed the economic crisis. Each one of these sequences defined the guidelines of the health system reforms as well as the actors involved in the reforming coalitions. In Argentina, the reform was aimed at efficiency, control of funds, and the introduction of competitive mechanisms in managing the Obras Sociales, using a process of decentralization devoid of a common design but which took away any responsibility from the central government. In Brazil, the association of reform with the democratic transition driven by a strong coalition of social movements led to the creation of the Universal Health System (SUS), which possesses a public, universal character, offering comprehensive care through a decentralized network under a single authority, with instruments for participation and social control at each level of government. In Mexico, however, attempts to decentralize the health system failed, given the numerous tensions between the central and provincial governments in the face of conflicts over the transfer of funds and jurisdiction. This finally culminated in the decentralization of the public health system, aiming at the increased coverage of a target population, which did not reach the health system as a whole, since it did not integrate the Mexican Institute of Social Security (IMSS) into the decentralized system. In short, the same decentralization process in the three countries was driven by different reasons: fiscal balance in Argentina, empowerment in Brazil, and targeting in Mexico. Another important trend has been the privatization of health services, which in the case of Brazil had already begun during the military government, increasing the public sector’s dependence on private supply. Even so, the Brazilian health reform sought to strengthen the public sector. In the Mexican case, on the other hand, whose services were mostly public, successive bureaucracy-driven reforms sought to favor the private sector. In all cases, considering the trends of decentralization and privatization, the designs of the reforms distanced themselves from the existing infrastructure, creating problems of provision and governance, though, at the same time, strengthening new actors and the interests of the reforming coalitions. The identification of paradigmatic models of social protection reforms in the 1980s–1990s allowed us to escape generalizations that mischaracterize differences and specificities that distinguish each one without arriving at the possibility of a better analytical understanding. Understanding these reforms as non-linear—but

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which entail comings and goings, with different starting points in institutional and political terms—we understand that the designs of social policies go beyond organizational arrangements and are based on values and interests shared by distinct reforming coalitions. It was thus possible to identify three paradigmatic models in the region: Chile’s Dual Model, Brazil’s Universal Model, and Colombia’s Plural Model (Fleury, 2001). The principles that guided the design of the Dual Model were the subsidiary role of the State; the policy’s focus on the poor; free choice of consumers; co-participation of users in costs; separation of the functions of financing and service provision; the competition between insurers and service providers. The break with the social security model—which had expanded and been part of the construction of the social-democratic State in Chile—was only possible because the reform took place during the military dictatorship and under the liberal guidance of Chicago-educated technocrats. Thus, a dual system was created with the poor being cared by public pension and health services, while those who had the means to contribute were displaced to a private sector of insurers, created via public policy demand. The Brazilian universal model came about from a strong, organized social movement in the health area, which joined the effervescent group of movements, unions, political parties, and social forces that set the transition into democracy in motion and culminated in the 1988 Constituent Assembly. The universal model was guided by the principles of citizenship rights and duty of the State, universal, and full access to public health services in a decentralized and participatory system. It was a double movement of displacement and sharing of power from the central to the local level, from the State to society. Like in the Chilean model, Colombia’s reform model was guided by the principles of efficiency, free choice, and competition although it sought to introduce a solidarity component that would allow for the progressive expansion of coverage, with a previously determined package of basic health services. It established the separation of corresponding functions and jurisdictions, assigning them to public and/or private agencies and services with greater capacity to fulfill them. It defined itself as a model of structured pluralism by bringing together services and functions, public and private in a single architecture. The reform coalition that put together and supported this reform was made up of technicians from international agencies, state bureaucrats, and the local political and economic elites. We can, therefore, conclude that common trends such as decentralization and privatization imposed a reforming scenario but were treated quite differently depending on the political regimes and actors present in the reforming coalitions, at different political junctures. Politics definitely matters, even if the economy imposes constraints that will manifest themselves as limitations in design or as tensions in the course of implementing reforms. Regardless of their design, the reforms of the 1980s–1990s had to face enormous financial restrictions propagated by international financial institutions (IFIs), resulting in the region’s governments adopting adjustment measures that led to the reduction of state intervention, privatization of services, and cuts in public spending. Such austerity measures were implemented even with the growing demand for rights and benefits in contexts of democratization

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and with the structural persistence of poverty and inequality. The marked dependence of Latin American national governments on international loans increased the power of IFIs such as the IMF, World Bank, and IDB, whose neoliberal agenda in defense of fiscal adjustment with the preservation of the primary surplus came to predominate in the regional context. As seen earlier, transnational political interests and resources, or the third cluster, became, according to Huber and Stephens (2012, p.  5), the single most important explanatory factor of changes in social protection policies beginning in 1980. Even if we do agree with the authors’ argument about the constraints imposed by IFIs on governments with high fiscal deficits, there is no way to dissociate the national political forces from the transnational power structure regarding their impact on social policies. The emphasis of national governments on target policies to fight poverty through Conditional Cash Transfers was strongly supported and sustained, both financially and politically, by International Financial Institutions. However, such recommendations and international pressures had to come in agreement with the interests of the national conservative coalitions in order to face local and sectoral reforming forces, which sought to expand universal social protection. In the Brazilian case, the international prescription to eliminate universal social protection systems in the areas of social welfare and health, replacing them exclusively with policies focused on fighting poverty, met strong resistance from reformers and support from the business and political elites. With social rights inscribed in the 1988 Federal Constitution, the reformers’ resistance was strong, supported by a coalition of intellectuals, municipal managers and governments, left-­ wing parties, social movements, and a myriad of actors inserted in the participatory architecture of these systems. While there were enormous financial constraints, with consequences for the loss of quality of services, there was also progress in relation to universal coverage, increased state capacities, and structuring of the service network. The result was a WS mix, with universal systems and policies alongside targeted programs. Thus, the polarization between targeting versus universalization proposed by IFIs was undone and, to a large extent, programs aimed at fighting poverty were inserted into the institutional framework of social protection in universal systems. In short, the level of benefits and the degree of universalization and the transformation of welfare benefits into citizenship rights depend on the correlation of forces and not on the scarcity of resources. Technocratic proposals for packages of basic universalism in an unusual arrangement of the prescriptive formulation of IDB technicians (Molina, 2006), and assumed as a desirable incremental strategy by political analysts, such as Huber and Stephens (2012, p. 258), must undergo the clash of national political forces before being implemented. With the crisis of capitalism in the 1980s and the measures taken to face it in the global economy, the issue of changes in the relationship between capitalism, democracy, and citizenship took center stage in the debate on the future of the WS, focusing on recent transformations in all the components of the triad national State, capitalist market, and citizenship, which characterized the construction of Western modernity and generated mass democracy, the regulated market and the distributive policies of the WS.  The economic globalization led to the deterritorialization of

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production and the circulation of goods and capital in a phase in which the logic of financial accumulation predominated, decoupling the market from the national dimension, under which state political power is exercised. The absence of regulation of the international movement of financial capital and the concentrated power of large transnational corporations reduced the States’ power of taxation and control, threatening the legitimacy of governments unable to respond to citizen demands, and guarantee rights to social protection. Since then, opposition has grown between what Streeck (2011) called “the market people” and the “the State people,” the latter being citizens who depend on distributive public policies threatened with cuts in public spending and setbacks in the WS’s trajectory. Inflationary policies increased private and public debt, austerity and financial liberalization policies were implemented in the face of the cycles of economic crises cycles that became increasingly faster. Yet democracy is as much at risk as the economy in the current crisis, if not more. Not only has the ‘system integration’ of contemporary societies—that is, the efficient functioning of their capitalist economies—become precarious, but so has their ‘social integration.’ With the arrival of a new age of austerity, the capacity of national states to mediate between the rights of citizens and the requirements of capital accumulation has been severely affected. (Streeck, 2011, p. 25)

The consequences of these transformations are identified as having severely restricted the very foundations of the social-democratic model, which had enabled the struggles for the expansion of citizenship and the redistribution of produced wealth to be incorporated. There is, instead, the predominance of a neoliberal ideology whose values of individualism and meritocracy are unable to prevent the fraying of social cohesion. This, in turn, has fostered the emergence of populist leaders who attempt to channel the general population’s dissatisfaction with its rulers in the face of increasing inequalities, unemployment, social exclusion, and setbacks in social protection systems through conservative and chauvinist rhetoric that incites polarization and violence. In the current scenario, the disjunction between capitalism and democracy, which is lessened in the regulated capitalism phase through social protection policies, also manifests itself in central economies and consolidated democracies, bringing them closer to a problem that is commonplace in developing economies and late-blooming democracies. The process of de-democratization occurs, whether in consolidated electoral democracies or in emerging democracies, whose social inclusion projects become unsustainable with restrictions of political rights, which are the realm of free collective action for conflict transactions under collectively accepted norms. An absolute regime—austerity—is imposed in which the interests of the market prevail, with no room for States to fulfill the role of general capitalist, able of displacing the productive conflict and preserving hegemony by implementing redistributive measures. Fraser (2017) points out that the deepening of progressive neoliberalism is only being possible due to its transmutation into authoritarian populism. Habermas (2013) agrees with Streeck’s diagnosis and believes that the greatest merit of his analysis was to have proven that the imposition of indebtedness on States by international agencies only serves to benefit the market and to deepen the

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crisis. However, he criticizes the pessimistic and somewhat fatalistic view of de-democratization based on two arguments. On the one hand, because the solution proposed by Streeck involves strengthening the National States to increase the markets’ regulatory capacity, which appears to him to be a nostalgic option. Internationalization is a fact that has benefited the market, but it should also be a way to strengthen citizenship. While the economy is globally integrated, politics are fragmented, and greater international cooperation should be sought to address this gap. He states, critically: Rather, I have the impression that Streeck underestimates the lock effect of constitutional norms valid not only from the legal point of view but also from the de facto existing democratic complex: the persistence of familiar and culturally based institutions, rules and practices policies. (Habermas, 2013, p. 38)

In addition to believing in the strength of democratic institutionality, new possibilities open up to thinking about global citizenship beyond its encapsulation in the national dimension, when political power and the market have already been de-territorialized. Balibar (2012) states in this regard: Indeed, the nation, or the national identity, however effective it has been in modern history, is only one of the possible institutional forms of the community of citizens, and it neither encapsulates all of its functions nor completely neutralizes its contradictions. (Balibar, 2012, p. 438)

We are a long way from envisioning universal citizenship when—quite the opposite—restrictions on immigrants are increasing even in European countries, whose tradition of the Enlightenment had made them supportive of the defense of human rights. However, there is also a growing international debate about the increase in inequalities and the impossibility for people to find ways to face risks considering their current placements in the labor market. There are increased proposals for a universal basic income (UBI) and for higher wealth taxes, even if these would be translated differently in each national scenario. Regarding the mature WS, the initial forecasts about its unfeasibility were overcome, being replaced by proposals for its readjustment to the changing reality, taking more than only economic and fiscal aspects into account to include the increase in unemployment, generational transition, and the enormous changes imposed by the incorporation of women into the labor market. For some authors (EspingAndersen, 2002; Hemerijck, 2013), it is about establishing a new social contract able to generate what they call an active WS, or a new paradigm for social investment, involving the return of people to work, establishing a new contract of gender and age, focusing investments on childhood. Enthusiasts of the new paradigm stress the importance of investing in human capital through active labor policies at different stages of life, compatible with a knowledge-based economy and permanent requirements for renewed skills. Even if they are correct in their diagnosis, they are mistaken in believing that measures of investment in human capital can address the structural issue of the dynamics of capitalist accumulation which increasingly generates informality, poverty, and social inequality. This is a transformation not only in the labor market

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but also in the composition of the working class, creating what Standing (2014) called “the precariat.” “Uberization” processes in platform capitalism introduce an enormous heterogeneity in the makeup of the working class in central and peripheral economies, distancing it from that which was at the origin of the WS and of its expansion. Therefore, both from the point of view of the State’s capacities in relation to regulation and taxation, and in relation to the composition of the working class, there have been changes that profoundly affect the institutional conditions of social protection. Pierson’s seminal work (Pierson, 1984, 1996, 2001) criticizes the exclusivity given to ideology and parties in the most recent political analyses of social protection, stating that the institutionalization of the WS causes more responses in support of its maintenance due to a path of dependence—making radical reforms, regardless of ideology, less likely to occur in democracies. Since the WS has become so large in central democracies that it distributes benefits to almost everyone, most voters favor a generous WS, which makes the political cost of reforms, with reduced benefit standards, too high for politicians who want to be re-elected. Despite criticism of the assumptions of the strictly institutionalist argument—which assumes the existence of rational calculations and causal links between voters and politicians— Pierson’s contribution has become a milestone in the last 25 years (Jensen et al., 2019). Pierson (2001) assumes that the WS retains considerable legitimacy as a source of social stability and a guarantor of the basic rights of citizenship even in situations of economic restrictions. Support for the WS is seen under the parameters of intensity and generality, that is, the ability of voters to defend the current standard since the benefits of its retrenchment are diffuse, while generality concerns the breadth of beneficiaries within society. Greater intensity and generality act as factors that hinder austerity measures and WS retraction. However, work precaritization in platform capitalism, a factor not considered by Pierson, tends to reduce the importance of both the factors of intensity and generality in defending the maintenance of the standard of benefits even in societies with consolidated democracies and social protection systems. Another factor identified as capable of reducing the impact of the proposed reforms is referred to as institutional stickiness, in other words, since the institutionality created in the expansion of the WS generates adherence and capabilities to veto radical proposals: By stickiness I have in mind two features of developed polities that reinforce the electoral obstacles to radical reform: formal and informal ‘veto points’, and ‘path dependent’ processes, which in many cases tend to lock existing policy arrangements into place. Each of these characteristics pushes reform agendas in the direction of incremental adjustments to existing arrangements. (Pierson, 2001, p. 414)

Despite the factors of resistance to radical reforms above, Pierson identifies as common dimensions of the restructuring of the WS recommodification, which concerns the public/private relationship in the provision of social protection; the control of spending, which leads to the de-financing of social policies; and, recalibration, which uses tools for rationalizing and updating programs in the face of current

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demands. The author believes that the impact of these dimensions will differ in distinct WSs given their dependence on trajectory, which leads to differences in institutional adherence and voter mobilization. There are, however, different systemic forms of WS retraction: Pierson distinguishes four forms of systemic retrenchment. One way of systemic retrenchment is to defund the welfare state, that is, to change fiscal policies in a way that jeopardizes the generation of high revenues necessary to pay for generous social policies. A second option is to change public opinion by emphasizing goals of free entrepreneurship, individual responsibilities or free choice. This would, in the long run, weaken the support of a large welfare state. Third, governments may try to change the institutional rules governing the welfare state, for example, by decentralizing policies to lower levels of government. And finally, weakening important pro welfare interest groups may also result in welfare state retrenchment in the long run as the rules of the game have changed. (Jensen et  al., 2019, p. 684)

If we consider the situation of Welfare States in Latin American countries, looking at the pioneers with stratified universalism or dual regimes, such as Brazil, we find numerous institutional weaknesses that favor dismantling. Using Pierson’s argument, we see that the inability to generalize by universalizing benefits restricts beneficiaries to a minority contingent, making it impossible to mobilize a systematic opposition to reforms. Moreover, the persistence of the combination of different degrees of exclusion with stratification reduces rights to the status of privileges, fragmenting demands, and the intensity of resistance to reforms. The idea of doing away with rights has a high electoral cost, but the discourse about the elimination of privileges is socially justified. Finally, stratification implies institutional fragmentation and weakening of state capacities, with different programs and institutions for different benefits, according to a stratified notion of citizenship. In this case, institutional adherence is severely weakened in its ability to veto more radical reform proposals. The means of retraction mentioned—de-financing, validation of individualism, the attempt at making the defenders of WS seem weak and irresponsible—have been systematically used in the dismantling of the Brazilian social protection system, alongside other dismantling strategies. We must bear in mind that, in one same country, different policies and sectors of social protection have different institutional trajectories, networks of supporters, opposing interests, resiliencies, as well as differentiated legal conditions. It is therefore essential to analyze each of the components of social protection to identify, in addition to common dismantling trends, their specificities, which concern both the weaknesses of each of the policies and institutions, as well as the political, legal, and administrative capacities that define their resilience to dismantling. The means of retraction of social protection and dismantling strategies act upon concrete policies and institutions, taking advantage of their weaknesses and the current economic and political context. Finally, we must bear in mind that dismantling, in the case of countries with late-­ blooming democracies, has a distinct character from mature WS systems. While in the latter case, the origin and expansion of social protection consolidated institutional systems that showed greater resilience in confronting the crisis currently faced by

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capitalism, in countries with dependent economies and late-blooming democracies the institutionalization of social protection occurred simultaneously with attempts at dismantling in a path riddled with comings and goings, progresses and limitations that restrict efficiency and rationality, subverting the bases of support, state capacity, and institutional adherence. Another singularity concerns the existence of business interests, whose accumulation takes place in the field of social protection. These private sector was often developed subsidized by public policies and dependent on public funds. In a market where there is low consumption capacity, the expansion of this sector can only happen with increasing interactions with the public sector and fierce competition for public funds. In this manner, the assumption of a public system that decommodifies social protection must be replaced by the notion of a public system that makes its commodification feasible, unless public interests impose themselves politically. An important fact is implementing social protection systems concurrently with the displacement of class struggle conflicts to struggles for truly diverse citizenship, due to the clashes around identity issues such as race, gender, sexual identity, social, and territorial exclusion. Although such conflicts overlap with forms of class domination, they are not exhausted within this framework and require new milestones. They are undoubtedly deeply affected, if not reproduced, through social protection policies. However, they are seldom included in agendas that could alter protection policies leading to a new Welfare State model.

8 Final Considerations The changes in social protection, which sought to universalize the social rights of citizens, are carried out through simultaneous, sequential, or even antagonistic processes of subjectivation, constitutionalization, and institutionalization (Fleury, 2009a, 2009b). Subjectivation refers to the constitution of the political actor or reforming coalition, capable of boosting a process of expansion of social protection. Constitutionalization is the movement to create a legal basis that makes social rights and benefits enforceable. Institutionalization is the creation of state capacities that make it possible to transform rights that exist in the law into exercised rights. These dimensions of social change can be synergistic, incremental, and sequential, but the hypertrophy of each one has deleterious consequences for the process of social change, such as the denial of the role of the State, judicialization, and bureaucratization. Furthermore, the incompleteness of each of these dimensions weakens the architecture and dynamics of social protection, constantly threatened by powerful interests that vie for public funding in opposition to redistributive measures, and advocate austerity and commodification policies. Such weaknesses and threats imply the permanent reconstruction of social protection, in political, legal, and institutional terms, requiring the capacity to mobilize new subjectivities, organized around a democratic utopia and a social construction under the logic of solidarity for the common good.

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Could the model we built to analyze the dimensions of political change toward the reform of a universalist Welfare State, involving the dimensions of subjectivation, constitutionalization, and institutionalization also explain the current dismantling of social protection we have been witnessing? If we consider Margareth Thatcher saying in an interview that economics is a method but that what we want is to change hearts and minds, we can clearly see that neoliberalism is a hegemonic project that seeks to build political subjects made to adhere to individualistic, competitive, and meritocratic values. The triumph of this hegemonic construction means that class domination is achieved by building an interclass consensus around these values, mediated by the permanent and concrete reality of coercion in relation to opposing positions. This correlation of forces causes setbacks in processes of social protection justified under the criticism of state intervention, privileges, and the lack of a social construction based on the merit of those who stood out for their results in the competition. In relation to de-constitutionalization, the setbacks in social protection require the presence of a government led by authoritarian populist leaders supported by representatives in Parliament, who attain an electoral majority by channeling popular dissatisfaction with frustrated expectations of consumption and social ascension promising the population that they will be able to reverse the situation if authorized by the majority to invest against democratic institutionality and social protection. De-constitutionalization takes place within democratic legality even if it brings about a de-democratization with the loss of social rights and benefits for the population that is most dependent on social protection policies and programs. Finally, regarding the dimension of institutionalization, different strategies are applied for dismantling public policies, as pointed out by Bauer and Knill (2014, p. 39) in the scope of political change. They identify distinct strategies that vary according to combinations of the decision-making process with the level of visibility. They are: dismantling by default—non-decision and low visibility; dismantling by a change in arena—active decision and low visibility; dismantling by symbolic action—non-decision and high visibility; active dismantling—active decision and high visibility. Our model of analysis of reforms as a process of change in public policies, however, inserts institutional dismantling strategies as part of a hegemony-building process, which places institutions and public policies as a political arena and as agents of change or resistance, depending on their alignment with the forces that struggle for power in society and the State. We conclude with the notion that the dismantling of social protection that we are currently witnessing prevents the construction of a people, prevented from being so by public policies that deny the social rights of citizenship and that methodically destroy the State’s capacities to ensure them. The universalization of social protection among us will require the construction of a political subject that expresses a polyclassist social coalition, incorporating identity struggles to the demands of formal, corporately organized workers and main beneficiaries of the pension system. Fighting the inequality produced by the

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market must be the structuring principle of social protection, preventing it from being contaminated and reproducing such inequalities in its institutionality. The counter-hegemonic must be central to this politico-cultural process of subjectivation, in which the values of social protection as a solidarity-based public good can overcome those of possessive and competitive individualism, of meritocracy as a solution to the structural problems of poverty and inequality. The materialization of these values into practices and institutions that build the common good will be indispensable to provide sustainability to the construction of universal social security. Universal social rights express the basic equality of citizenship, which, in societies as unequal as Latin America’s, turns a reform project based on egalitarian principles of justice and social redistribution into a proposal that destabilizes the structures of domination, rejecting the situations that reproduce them. In the latter case, we find the transliteration of the universal right to health into universal coverage, removing from the benefit an equal citizenship status, a legally enforceable right, public relevance, state regulation, and social participation. The post-pandemic scenario resumes the importance of state action for the coordination, regulation, and provision of public goods since the market is unable to do it. The institutionality of social protection has been weakened by its sectoral fragmentation, which limits its strength within public administration, pulverizes sectoral struggles, and increases competition among social policies for scarce resources. In addition, linking the standard of benefits to that of the formal labor market creates hierarchies that depreciate some beneficiaries and providers. This adherence of social protection to the formal labor market has always been a promoter of stratification and exclusion in societies in which enormous heterogeneity prevails in the makeup of the workforce. Current changes in the spheres of production and labor require a complete transformation of this framework, which configures a critical juncture, flush with innovation. The incorporation of identity and environmental agendas into democracies’ struggle for democratization introduces requirements for the expansion and singularization of social protection systems, inclusion of care as a benefit, protection policies and training of caregivers, affirmative policies and actions, as well as a joining of social with environmental policies, which are essential for quality of life. Lastly, it is a matter of understanding the current situation as critical, which imposes enormous limitations and challenges in the face of the dismantling perpetrated through the de-financing, commodification, and destruction of state capacity, but also as an opportunity to build innovative proposals and a new social foundation to provide sustainability to social policies. A new social protection is not only possible but essential!

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Huber, E., & Stephens, J. (2012). Democracy and the left–Social policy and inequality in Latin America. The University of Chicago Press. Immergut, E. (1992). The political construction of interests: National Health Insurance Politics in Switzerland, France and Sweden, 1930–1970. Cambridge University Press. Jensen, C., Wenzelburger, G., & Zohlnhofer, R. (2019). Dismantling the welfare state? After twenty-five years: What have we learned and what should we learn? Journal of European Social Policy, 29(5), 681–691. Kowarick, L. (1981). Capitalismo e Marginalidade na América Latina. Paz e Terra. Lipset, S. M. (1959). Some social requisites of democracy: Economic development and political. The American Political Science Review, 53(1), 69–105. https://doi.org/10.2307/1951731 Machado da Silva, L.A. (2002) Da Informalidade à Empregabilidade (reorganizando a dominação no mundo do trabalho). Cadernos CRH, , 37, p 81–109. Marshall, T. H. (1967). Cidadania, Classe Social e Status. Zahar. Malloy, J. (1986). Política de Previdência Social no Brasil. Graal Editores. Martinez- Franzoni, J. (2008). Welfare regimes in Latin America: Capturing constellations of markets, families, and policies. Latin American Politics and Society., 50(2), 67–100. https://doi. org/10.1111/j.1548-­2456.2008.00013.x Mesa-Lago, C. (1978). Social security in Latin America–pressure groups, stratification and inequality. University of Pittsburgh Press. Miles, J., & Quadagno, J. (2002). Political theories of the welfare state. Social service review. The University of Chicago. Mello, J. M. C. (1982). O Capitalismo Tardio–Contribuição à revisão crítica da formação e do Desenvolvimento da Economia Brasileira. Editora Brasiliense. Molina, C. G. (Ed.). (2006). Universalismo básico: una nueva política social para América Latina. Inter-American Development Bank. O’Donnell, G. (1988a). Transições, Continuidades e alguns Paradoxos in Reis, F W & O’Donnell (org.) A Democracia no Brasil–Dilemas e Perspectivas (pp. 41–71). Vértice. O’Donnell, G. (1988b). Hiatos, Instituições e Perspectivas Democráticas in Reis, F W & O’Donnell. (org.) A Democracia no Brasil–Dilemas e Perspectivas (Vol. 1988, pp. 72–90). Vértice. O’Donnell, G. (1984). Delegative democracy. Journal of Democracy, 5(1), 94–108. Offe, C. (1989) A democracia contra o Estado do bem-estar? In Capitalismo desorganizado. , Editora Brasiliense, pp. 269–318. Offe, C. A. (1983). Democracia Partidária Competitiva e o “Welfare State” Keynesiano: Fatores de Estabilidade e Desorganização. In: Problemas Estruturais do Estado Capitalista. Dados Revista de Ciências Sociais, 26(1), 29–51. Pierson, P. (1984). Dismantling the welfare state? Reagan, Thatcher, and the politics of retrenchment. Cambridge University Press. Pierson, P. (1996). The new politics of the welfare state. World Politics, 48(2), 143–179. Pierson, P. (Ed.). (2001). The new politics of the welfare state. Oxford University Press. Polanyi, K. (1980). A Grande Transformação: As Origens da Nossa Época. Campus. Przeworski, A. (1989). Capitalismo e social-democracia. São Paulo. Reis, F. W. (1988a). Consolidação Democrática e Construção do Estado in Reis, F W & O’Donnell. (org.) A Democracia no Brasil–Dilemas e Perspectivas (pp. 13–40). Vértice. Reis, F.  W. (1988b). Consolidação democrática e construção do Estado in Reis & O’Donnell (org). A Democracia no Brasil–Dilemas e Perspectivas. Vértice. Rimlinguer, G. (1971). Welfare policy and industrialization in Europe, America and Russia. John Wiley & Sons, Inc. Rostow, W. W. (1960). The stages of economic growth: A non-communist manifesto. Cambridge University Press. Santos, W. G. (1979). Cidadania e Justiça. Editora Campus. Segura-Ubiergo, A. (2007). The political economy of the welfare state in Latin America: Globalization, democracy, and development. Cambridge University Press. Sen, A. (2000). Desenvolvimento como Liberdade. São Paulo.

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Standing, G. (2014). Understanding the precariat through labour and work. Development and Change, 45(5), 963–980. https://doi.org/10.1111/dech.12120 Streeck, W. (2011). The crisis of democratic capitalism. New Left Review [internet]., 71, 5–29. https://newleftreview.org/II/71/wolfgang-­streeck-­the-­crises-­of-­democratic-­capitalism Skocpol, T. (1985). Bringing the state back in: strategies of analysis in current research. In P. B. Evans, D. Rueschemayer, & T. Skocpol (Eds.), Bringing the state Back in. Cambridge University Press. Steffen, M. W., & Côrtes, S. V. (2018). Understanding social protection systems in Latin America and the Caribbean: Typologies and efforts of classification. Sociology Compass., 12, e12634. https://doi.org/10.1111/soc4.12634 Therborn, G. (2014). Los pactos en la teoría y en la historia social de Europa y la política de los Estados de bienestar: algunas experiencias. In Pactos sociales para una protección social más inclusiva: Experiencias, obstáculos y posibilidades en América Latina y Europa (pp. 134–140). CEPAL. LC/L.3820. Wilensky, H. (1975). The welfare state and equality. Structural and ideological roots of public expenditures. University of California Press.

Part II

Austerity Policies and Economic Constraints

Chapter 2

The Institutional Construction of Post-­1988 Austerity Carlos Eduardo Santos Pinho

1 Introduction The betterment of the post-World War II Welfare State coincides with the growth of public funds, social expenditures, and with the strengthening of the bargaining power of unions, especially between 1945 and 1975, reinforcing the compatibility between capitalism and democracy. In this sense, public funds played a crucial role in the preservation of the capitalist means of production and the viability of the social contract (Salvador, 2020; Streeck, 2018). This backdrop of contention, which took place in the 1970s, within the scope of profound transformations of capitalism toward financialization, can be characterized by an attack by big capital on the institutions of the Welfare State, which played a prominent role in post-World War II. This was reflected in Brazil in the context of A preliminary version of this reflection was presented at the 8th International Mercosur University Forum Congress (FoMerco)—30 Years of Mercosur: Challenges and Trajectories (09/28 to 09/30/2021, Online Event). Axis 09. Public policies, development, and integration. Professor of the Graduate Program in Social Sciences at the University of Vale do Rio dos Sinos (PPGCS-UNISINOS), Pinho did a postdoctoral internship at the National Institute of Science and Technology in Public Policies, Strategies and Development (INCT/PPED) and at the Graduate Program in Political Sociology at the Universidade Estadual do Norte Fluminense Darcy Ribeiro (PPGSP-UENF). With a PhD and Master’s in Political Science from the Institute of Social and Political Studies of the State University of Rio de Janeiro (IESP/UERJ), he is a partner at the Celso Furtado International Center for Development Policies and a researcher at the INCT/PPED. He is a member of the Interinstitutional Study Group on Social Protection Futures (Center for Strategic Studies/FIOCRUZ) C. E. S. Pinho (*) Unisinos University, Porto Alegre, Brazil e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Fleury (ed.), Social Policy Dismantling and De-democratization in Brazil, Societies and Political Orders in Transition, https://doi.org/10.1007/978-3-031-35110-5_2

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the competition over the appropriation of public funds and the budget at around the time of the liberalizing policies of the 1990s. At the time, the political-economic elites dependent on the financial globalization circuits undertook austerity reforms. If, on the one hand, this package of reforms sought to retract the constitutional attributions of the State and leverage the role of the market in the provision of social policies, on the other hand, it made cuts that exacerbated the scenario of chronic underfinancing and the dismantling of the institutional armor of social protection. In addition to mobilizing the bibliography on the Political Economy of Development and Public Funding, this reflection draws on the academic production on policy dismantling (Bauer & Knill, 2014; Jordan et al., 2013; Pierson, 2001) to show under what economic and institutional conditions cronyism1 and politicians of liberal-­ conservative affiliation act to dismantle public policies. In this sense, we argue that, in the case of Brazil, the establishment of rigid fiscal rules from a historical-institutional perspective had strong impacts on the current process of dismantling public policies and their financing structure, management, access and use. This is a profound political change that signals, in the face of constant pressures imposed by global financial forces, the commitment of political agents to the scale of austerity (Bauer & Knill, 2014; Pierson, 2001). The purpose of this chapter is to explore each of these austerity reforms and their reverberations for Welfare States, the democratic political regime and citizenship, with the purpose of understanding how financial dominance has been constraining democratic freedom in policy practice. The hypothesis that guides this investigation is to relate the Managerial Reform of the State Apparatus, the 2000 Fiscal Responsibility Law and Constitutional Amendment No. 95/2016 (PEC 95 or Expenditure Ceiling Constitutional Amendment) with the process of underfunding and the current de-financing of social policies. Since the pro-market policies (1990–2002), a cycle of austerity and economic-institutional reforms was established that leveraged privatization, trade and financial liberalization, dependency on external markets, deindustrialization and chronic underfunding of the social security budget for the payment of interest, charges and depreciation of the public debt (Ribeiro & Salvador, 2018; Salvador, 2010, 2017, 2020). After the 2016 impeachment, the establishment of Constitutional Amendment No. 95/2016 further deepened these dimensions at an unprecedented speed, depth and scope in the Brazilian political economy when compared to the rest of the world. The chapter is divided into five sections, the first being this introduction. The second section explores the consequences of the pro-market reforms (1990–2002). From the administrative reforms produced in the Anglo-Saxon countries (United Kingdom, USA, New Zealand), the State Managerial Reform, during the Fernando Henrique Cardoso administration (1995–2002), was drafted by former minister  Politicians who act in exchange for positions, funds, parliamentary amendments, prioritizing private interests over democracy and the collective. The current bloc of parliamentarians of the socalled Centrão is an elucidating example in this regard, as it controlled the budget in the Bolsonaro government. 1

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Luiz Carlos Bresser-Pereira. The objective was to modernize the Brazilian State by proposing a transition from the allegedly “bureaucratic,” “pachydermic” and “cumbersome” State, typical of National Developmentalism (1930–1985), to a managerial, flexible State, focused on “governance”. and optimization of scarce resources in the context of the severe fiscal crisis, external indebtedness and hyperinflation as legacies of Authoritarian National Developmentalism (1964–1985) (Pinho, 2019). Seeking to reinforce austerity policies based on the subordination of macroeconomic policy to the orthodox triad (inflation targets, floating exchange rate and primary fiscal surplus), the third section points out that the Fiscal Responsibility Law (LRF/2000) imposed limits on indebtedness at the federal, state and municipal levels, affected spending on bureaucracy and social policies as well as curtailed the ability of states to mobilize public banks to pay expenses. The fourth section shows that, implemented after the break with democracy in 2016, when making cuts in health, education and infrastructure policies for a period of 20 years, draconian Constitutional Amendment No. 95/2016 constitutes a mechanism for dismantling public policies that enables the transfer of public funds to the financial system. The New Fiscal Regime makes planning and implementation of public policies unfeasible, as well as the countercyclical fiscal policy as a legitimate instrument of the State to fight economic crises, encourage demand and strengthen the social protection cushion. This is a radical departure from the market-oriented reforms of the 1990s, with deleterious impacts on democracy and citizenship. These reforms, which had the unrestricted support of a broad liberal-­conservative coalition, engendered a spiral of deregulation unprecedented in the scenario of the 1988 Federal Constitution, which established expanded social protection. The bill arrived at the current critical juncture of the global Covid-19 pandemic, and the problems caused by these strict fiscal rules have exacerbated inequality and extreme poverty. It is crucial to think about how progressive sectors could intervene to restore the capacities of the Welfare State to overcome the obstacles imposed by the global financial order. Finally, the fifth section makes the final considerations of the chapter.

2 Managerial State Reform and Neoliberal Governance In the international scenario of the 1970s crisis, the containment of public spending linked to high interest rates on public debt favored capital to the detriment of workers, who suffered unemployment. The rhetoric of fighting the public deficit was accompanied by a restrictive monetary policy favorable to the increase of accumulation margins. This converged to the establishment of a vicious circle based on unemployment: the public deficit linked to the increase in interest rates prohibits the realization of public spending that guarantees full employment, in addition to increasing the public deficit itself with the creation of a high-profit public debt to guarantee the minimum income of capital (Kalecki, 1987 apud Bercovici & Massonetto, 2006).

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The transformations processed under global capitalism completed the deconstruction of the regulatory pattern that built the post-World War II world order, which gave way to a new order, marked by the imperialism of the American currency, resulting from the U.S. Treasury Bill standard and the end of the ability to convert dollars into gold, by the unregulated expansion of markets and by the wide dissemination of neoliberal policies in national States (Bercovici & Massonetto, 2006). Thinking about the reform of the Brazilian State in the scenario of the primacy of neoliberal policies engendered by profound transformations in the international monetary arrangement in the 1970s and 1980s, implies analyzing the role of economic planning and the constitutional limits of the public budget. The constitutionalism of the twentieth century had progressed through the structuring of an economic-financial order, with planning as the central mechanism of state organization of the capitalist means of production. At the end of the twentieth century, however, the pattern of public financing of the post-World War II economy was defenestrated, triggering the neoliberal reaction and the institutional dismantling of the Bretton Woods System. The global constitutional paradigm that served as support for the Welfare State came to be strongly opposed, bringing to fore issues that already seemed to have been overcome—the separation between the economy and public finances, the abstention of the State in the economic domain and the alleged financial neutrality defended by liberals (Bercovici & Massonetto, 2006). We argue, however, that the systemic crisis of international capitalism emerged between the end of the 1960s and the beginning of the 1970s, with neoliberalism being a “response” that had already been devised long before. Its primacy directly affected the current pattern of public funding and the Welfare States. At the international level, the fiscal crisis of the State dates back to the 1970s and coincides with the rise of neoconservatism in England (Margaret Thatcher) and in the US (Ronald Reagan), which activated an attack on the Welfare State, as well as a process of economic restructuring, labor control and retraction of union bargaining power, which was one of the foundations of the Fordist regime (Harvey, 1993). Neoliberal ideology spread to developing countries the premises of the “Washington Consensus,” namely: privatization, fiscal austerity, monetary stabilization, financial deregulation, trade liberalization and state reform. Following the first post-­ dictatorship presidential election, in 1989, Fernando Collor de Mello tried to implement this package of reforms clumsily and without building a parliamentary coalition in Congress (Pinho, 2019). During the government of Fernando Henrique Cardoso (1995–2002), however, a coalition was built to materialize the pro-market reforms. Austerity policies were the anchor of the fight against inflation, which took place with the creation of the Real Plan2 in 1994. This government was inspired by rich countries of the Organization for Economic Cooperation and Development (OECD) to carry out the managerial reform of the Brazilian State. This, in turn, was conceived as

 This was the currency stabilization plan to control the inflationary acceleration inherited from the military dictatorship (1964–1985). 2

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unavoidable to ensure currency stabilization and GDP growth, in view of the multidimensional crisis that affected the Brazilian economy in the 1980s and 1990s: fiscal weakness, external indebtedness and hyperinflation (Bresser-Pereira, 2003a, 2003b, 2016; Presidência da República, 1995). In order to face this counterproductive scenario, the government’s argument was that it would be essential to restructure public administration to emphasize factors such as productivity, quality, efficiency, control of results and decentralization, which would put an end to close supervision, the use of strict and meticulous regulations, and the auditing of procedures. According to the architects of the managerial reform, such elements would supposedly provide the Brazilian State with governance capacity, that is, optimize the (scarce) resources available in a rational and efficient way to do more with less. Then, the managerial reform would emerge as an alternative to address the fiscal and administrative crisis, and the developmentalist state interventionism (Abrucio & Costa, 1998; Bresser-Pereira, 2003a, 2003b, 2016; Diniz & Boschi, 2014; Motta, 2007; Presidência da República, 1995). The social-liberal diagnosis was that the crisis of the State was a result of the lack of control of public accounts, hyperinflation, unemployment, low economic growth. In this sense, it was defined (1) as a fiscal crisis, as the State lost credit and public savings became negative; (2) the end of the statist strategy of state intervention, whose characteristics are the Welfare State of European social democracy, the import substitution model (ISI) in the third world, and statism in communist countries; and (3) overcoming bureaucratic public administration and replacing it with professional management (Abrucio, 2003, 2007; Bresser-Pereira, 1998, 2003a, 2003b; Cardoso Jr., 2010; Presidência da República, 1995; Rezende, 2011). As pointed out, among the various measures, the Bresser reform presupposed a permanent fiscal adjustment and the redefinition of the state apparatus to increase its “governance” capacity, that is, to implement public policies efficiently and rationally. The strategic role of the State was reconfigured to become a mere regulator and promoter, instead of a direct provider of services (Bresser-Pereira, 1998; Cardoso Jr., 2010; Diniz & Boschi, 2014; Lima Jr., 2014; Presidência da República, 1995). Criticism of the State’s interventionist standard was also linked to the need to break the political resistance of civil servants, conceived as patrimonialist and supported by corporatist agendas that increase government costs and hinder modernization. In a critical perspective of the neoliberal view of the “Washington Consensus” and the social-liberal optics of Bresser-Pereira, Sonia Fleury asserts that the reform of the administrative state framework is linked to the sphere of state institutionality. However, it is necessary to take into account the reverberations of these changes in the distribution of power, that is, in the correlation of forces, in the strategic framework of struggles and in the way in which institutional changes impact the positions of power or the representation of interests of different political actors. Finally, state reform has to be understood as encompassing the internal dynamics of power, the development model and insertion in the global economy (Fleury, 2001, pp. 9–10). As for social policy, the state reform defended the decentralization, for the non-­ state public sector, of the execution of services that would not include the exercise of state power, but that should be subsidized by it, as is the case of public policies

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for education, health, culture and scientific research, which was defined as “publicization.” This was a question of establishing a partnership mechanism between the State and society for the financing and control of the production of services that are within the State’s purview but not exclusive to it. In the context of the managerial reform, social organizations emerged in the midst of social and scientific services, that is, activities performed by the State, but which were not exclusive to them. Public institutions were replaced by semi-public or private service management models (Bresser-Pereira, 1998, 2003a, 2003b, 2016; Diniz & Boschi, 2014; Lima Jr., 2014; Prates, 2007; Presidência da República, 1995). One of the effects of this reform was the replacement of statutory employees by contracts through the Consolidation of Labor Laws (CLT/1943) decree.3 The Constitution provides that public services must be carried out by civil servants—who have job stability and their own retirement rules—hired through public bids. The State’s managerial reform made it possible to increase regulatory and coordination attributions, especially at the federal level, as well as vertical decentralization at state and municipal levels and executive functions in providing infrastructure policies and social services. The central argument was to improve governance, that is, to facilitate the transition from a so-called bureaucratic, time-consuming and inefficient public administration to a managerial, efficient public administration, endowed with flexibility and oriented toward the “consumer and client citizen” (Bresser-Pereira, 1998; Costa, 2008; Lima Jr., 2014; Presidência da República, 1995). From a critical viewpoint of the managerial state reform, Diniz and Boschi (2014) pointed out that the Executive was systematically empowered to carry out neoliberal reforms, although the state’s capacity to provide public policies was weakened during the fiscal adjustment policy, based on cutting costs and investments. The State was reconfigured and permeated by the guidelines of action from the rational perspective of the market to the extent that all spheres of state action were subordinated to economic policy, particularly the scope of politics (Boschi & de Lima, 2002). Different from the notion that the state apparatus was being retracted and dismantled, what we observed was an active state interventionism meant to install a vast regulatory and legislative scope aimed at increasing the spheres of action of the market. It was believed that the guidelines of the Washington Consensus would help overcome Brazil’s and Latin America’s the backwardness. That is, the supposed fight against the “pachydermic state” actually meant a change in the nature of state intervention. This liberal-orthodox prescription, which redefined Executive/ Legislative relations, emphasized a technocratic concept of development, since the dismemberment of the developmentalist state through policies of privatization, trade liberalization, financial deregulation, liberalization of capital flows contributed to the irruption of a new coalition that instituted a new modality of state interventionism centered on the market (Boschi & de Lima, 2002).  This law, created by Getúlio Vargas, promoted the regulation of labor relations in an unprecedented way, creating rights such as the work record booklet, working hours, vacations, minimum wage, weekly rest, among others. 3

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In short, we argue that the managerial reform sought, from the rhetoric of neoliberal “governance,” to modernize public management and suppress the developmentalist and interventionist legacy of building the rational-bureaucratic armor of the Brazilian State. The construction of the modern state bureaucracy, endowed with characteristics such as impersonality, specialization, meritocracy, technical competence and public bids, dates back to the creation, in 1938, of the Administrative Department of the Public Service (DASP). However, it is in the 1988 Federal Constitution that the crowning and consolidation of the public bureaucracy model was verified. The next section, therefore, scrutinizes the implementation of the Fiscal Responsibility Law (LRF/2000), a milestone in the inauguration of the culture of fiscal austerity in the Fernando Henrique Cardoso government. This normative structure reproduced the technocratic and insular bias of the Brazilian State in the management of macroeconomic policy, which dates back to Authoritarian National Developmentalism (1964–1985), which the aforementioned government supposedly aimed to combat.

3 Constitutional Limits to Public Investment The Brazilian historical process of restructuring public finance does not result exclusively from our historical instabilities but derives from a broader process of changing the function of the public fund in view of the transformations that occurred in the capitalist system since the 1970s. In order to attract private investments, the Brazilian State had to stabilize the real value of the assets of the owning classes, that is, the public budget must guarantee private investment to the detriment of social rights and public services aimed at the most vulnerable. In this context, in structuring the political-economic space of accumulation, financial law began to serve a new state attribution—the legal protection of capital income and the sanction of private financial gains through the allocation of state guarantees to the systemic process of accumulation, which is led by financial capital (Bercovici & Massonetto, 2006). In the period after the 1988 Federal Constitution, the control of the monetary budget triggered the subjection of fiscal policies (and the “program-budget”) to the logic of monetary stabilization (Bercovici & Massonetto, 2006). After the end of National Authoritarian Developmentalism (1964–1985) (Pinho, 2019), whose legacy was monumental external indebtedness, recession, fiscal crisis, and hyperinflation, followed by several ill-fated stabilization plans, the Fernando Henrique Cardoso government (1995–2002) was marked by inflation control and economic-­ institutional reforms. Such measures, aimed at subnational governments and the renegotiation of state debts, were favored by the strengthening of economic bureaucracy, the political strength resulting from the success of the Real Plan and the emphasis given to monetary stabilization. It was in this scenario that, in 1994, the Emergency Social Fund was born, being renamed Fiscal Stabilization Fund and

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then Earmarked Lifting of Social Security Resources (DRU) in 2000. From this mechanism, the federal government withdraws, annually, 20% of the resources allocated by the 1988 Federal Constitution for Social Security and education for the formation of a primary surplus with a view to paying interest on the public debt (Fleury, 2008). The exchange rate anchor was the basic element of the Real Plan to control inflation, and there was a need to attract foreign capital through rising interest rates. The consequence was a significant increase in public debt between 1994 (R$60 billion) and 2001 (R$624 billion). At the 1998 threshold, total public debt stood at 35.8% of GDP. This level reached, at the end of 1999, approximately 50% of GDP and 60% in 2002. In that same year, a strong budgetary limitation was implemented, in which the Fernando Henrique Cardoso government pursued, in line with IMF recommendations, back-to-back primary surpluses, which reached 3.5% in 2001 (Loureiro & Abrucio, 2004). One of the central components of this reformist agenda was the Fiscal Responsibility Law (LRF/2000), which established a rigorous institutional framework for public debt, establishing ceilings for expenses with administrative bureaucracy at the municipal, state, and federal levels and vetoing renegotiations of debts between federal entities. The signatories of the LRF argued that it promoted horizontal accountability mechanisms, by vetoing the use of public resources in populist and wasteful practices, inaugurating a political culture of fiscal responsibility (Abrucio & Costa, 1998). This was the first attempt to impose constitutional limits on the growth of public expenditure in the context of austerity and a process of decentralization of social services, greatly harming the implementation of public policies, especially within municipalities. The “epistemic community” of neoliberal economists, with extensive experience in public management and the financial market (Pinho, 2021), argued that the LRF was very positive, as it disciplined public finance and applied rules of “transparency,” providing the beginning of a cycle of high-level generation of primary surplus that caused the debt/GDP ratio to fall, even though interest rates remained high, accounting for a large portion of the public deficit4 (Nóbrega, 2016; Praça, 2016; Salto & Almeida, 2016; Tollini, 2016). The central elements of LRF/2000 were as follows: (1) veto of financial aid between the different governmental spheres, with the purpose of reducing moral hazard between public and private actors; (2) creation of forms of control of public finances during the electoral period; (3) establishment of annual fiscal targets and presentation of quarterly reports to monitor public accounts; (4) reiteration of strict limits of public indebtedness established by the Federal Senate, reinforcing the prohibition of the acquisition of loans and agreements with the federal government;  According to these economists, such advances, which began in the second half of the 1980s, were impeded by the practices of the PT governments (2003–2016), which began to be described as “creative accounting.” This, in turn, constitutes a device of the government to postpone the transfer of funds from the National Treasury to public banks and administrative authorities, with the objective of paying social programs and subsidized loans. 4

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(5) reduction of spending on civil servants regarding the levels of government and the percentage related to the Executive, Legislative and Judiciary branches, in order to suppress the asymmetries in force in the state governments (Loureiro & Abrucio, 2004). The result was the great negative impact on the expansion of social services provided for in the Constitution and the “encouragement” to adopt the managerialism proposed by the state reform, described above, whose example is the work of Social Organizations. The important thing to emphasize is the impact on federalism, since the Union’s spending was not subject to the same rules as states and municipalities. Therefore, contrary to the spirit of the 1988 Federal Constitution, what happened was a centralization of power in the Union. The LRF/2000 and the proposed constitutional amendment establishing the zero nominal deficit, with the objective of increasing the primary surplus and promoting the decoupling of revenues from the budget, were meant to exclude the budget from public scrutiny, ensuring the imposition of monetary policy goals for the benefit of private economic interests, which did not want to risk their investments and financial speculation practices. The execution of the economic order and the social order of the 1988 Federal Constitution were subsumed in the budgetary and financial dimension of the State, which leveraged the “shielding” of financial institutions. LRF/2000 only drove this process by prohibiting the pursuit of full employment and the implementation of another financial policy. It is worth mentioning the edition of Law No. 10,028, of October 19, 2000, which, among several austere measures, characterized the promotion of the public deficit as a crime (Bercovici & Massonetto, 2006). The Executive Branch played a central role in implementing economic and institutional reforms. However, the Legislative Branch also took the initiative to create laws concerning the limitation of public indebtedness. Before the enactment of LRF/2000, an entire framework of laws was put into effect to reinforce the Fernando Henrique Cardoso government’s commitment to the fiscal austerity agenda. In 1997, the government set strict standards for refinancing the public debt of the states and the Federal District. In 1998, the Senate passed a resolution, indicating greater rigidity in the control of public expenses, insofar as it vetoed the issuance of new public bonds for indebted federative entities. There was a significant retraction in the public financing capacity and transfer of power to the Central Bank, which no longer forwarded to the Federal Senate a request for authorization of indebtedness of governments with a primary deficit. The Senate created two resolutions in December 2001—preserving the conditions of the previous one—although, they transferred from the Central Bank to the National Treasury the assignment to deliberate on requests for indebtedness from city and state governments.5 This normative

 This trend contrasts with the current scenario of the global coronavirus pandemic, in which the Bolsonaro government shied away from its traditional role in federal cooperation/coordination and in which the Federal Supreme Court (STF) began to decide in favor of governors and mayors, breaking with the tendency to judge in favor of the Union in federal disputes (Souza & Fontanelli, 2021). 5

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framework had a strongly austere bias, as it vetoed the issuance of government bonds for a period exceeding 10 years (until 2010) (Loureiro & Abrucio, 2004). The senators in favor of and in opposition to the Fernando Henrique Cardoso government committed themselves to reinforcing the fiscal adjustment, even if pressured by state governments. It is important to point out that the senators were not subordinate to the Executive Branch but bargained with the federative entities and the federal government for fiscal responsibility measures such as the privatization of state public banks, the creation of a program to reduce the public sector in banking activity in the states and the transfer of powers to the Central Bank (Loureiro & Abrucio, 2004). The attempt to exclude the budget and public finances from the democratic debate is not specific to Brazil. Examples of this paradigm are the rigid fiscal targets to contain the public deficit imposed in the European Union through the Maastricht Treaty of 1992, as well as the US laws of 1985 (the Gramm-Rudman-Hollings bill), 1990 (Budget Enforcement Act) and 1997 (Balanced Budget Act), which required fiscal balance in the formatting of the budget, but not in its execution. In addition, a proposal to constitutionalize the budget balance was presented, which was overturned by a few votes in the US Senate (Bercovici & Massonetto, 2006). Financial law, previously focused on the organization of public financing of the capitalist economy and the provision of social welfare policies, had its content significantly reformatted. If financial law was once focused on ordering the material expansion of the world system based on the Keynesian paradigm, it now gave way to a normative complex aimed at organizing the financial expansion of the systemic process of accumulation. At a level diametrically opposed to the post-World War II order, the financial elites of the corporate world, located in the intertwining of the power and capital networks of the world system, began to command the dissemination of capital and impose an adaptation of national legal systems, in view of the assumptions of the owners of global wealth (Bercovici & Massonetto, 2006). In the context of reconfiguration of global capital linked to significant transformations in the domestic budget framework, LRF/2000 was the first attempt to lay obstacles in the arrangement proposed by the 1988 Federal Constitution. Not by chance, this attempt, at the time, also took place in a context of administrative reform: constitutional limits, financial strangulation of social policies, and layoffs. Some elements contributed to create a convergence regarding fiscal responsibility during the historical-institutional environment of neoliberal reforms. They were: the success of the Real Plan, trade liberalization to foreign capital, the structural impositions of the globalized financial market in defense of favorable macroeconomic conditions for international investors (monetary stabilization, balanced trade balance, and primary surplus), as well as a process of raising awareness about the dangers of fiscal insolvency (precariousness of public services, strikes, delay, and lack of payment to the technical-bureaucratic body) (Giambiagi, 2005; Loureiro, 2001; Loureiro & Abrucio, 2002; Martins, 2002; Pinho, 2019). As a result of LRF/2000, substantive cuts occurred in areas such as sanitation and infrastructure (Loureiro & Abrucio, 2004).

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LRF/2000 had significant impacts on intergovernmental relations with the renegotiation of state debts, the privatization of state banks, the creation of new rules regarding public debt and the strengthening of economic institutions linked to the Executive Branch, such as the Ministry of Finance and the Central Bank. Insulated, depoliticized, and without being submitted to democratic scrutiny, the creation of these rules of fiscal responsibility had a profound impact on the democratic forms of control of public finance. This was feedback from the technocratic profile of macroeconomic policy management, which was a constitutive feature of authoritarian regimes in Brazil and Latin America in the second half of the twentieth century. Also, in the name of efficiency and a supposed rationality in the fiscal management of the Brazilian State, such technocratic bias predominated during the re-­ democratization process, to the detriment of policy and accountability mechanisms (Loureiro & Abrucio, 2004). Finally, in the scenario of fiscal austerity initiated in the 1990s, the orthodox macroeconomic triad (high interest rates, floating exchange rate, primary fiscal surplus) constituted the axis of support for the Real Plan and decoupling mechanisms drained important resources from social security tax sources. In the year 2000, the creation of the Decoupling of Union Revenues (DRU) reinforced this trend and has been in place used since then6 (Salvador, 2020, p. 376). The next section will examine the New Fiscal Regime, in accordance with PEC-95, from 2016, as a radical austerity measure that took the pro-market reforms of the 1990s to the extreme, since it imposed a tax rule limiting investments in health, education, and infrastructure for 20 years. On the other hand, a large amount of taxpayers’ tax funds is directed to the payment of interest, charges, and amortization of the public debt. Such austerity, which has no precedent in any other country in the world, removes from the democratic political spaces of the State the prerogative to expand public spending in times of economic crisis, hinders countercyclical fiscal policy, disregards aging and population growth, pressuring more and more public services. In addition to intervening in the sovereignty of the State over the formulation and implementation of macroeconomic policy, the New Fiscal Regime weakens the democratic political regime and the pressing demands of the poorest citizens for the benefit of a financial oligarchy that concentrates increasing amounts of the country’s income and political power.

 Constitutional Amendment n. 93, from September 8, 2016, in addition to extending the DRU until 12/31/2023, increases from 20% to 30% the amount of federal tax revenue freely used for the payment of interest, charges and amortization of public debt (SALVADOR, 2020). 6

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4 The New Fiscal Regime and Extreme Neoliberalism The controversial process of impeachment of the former president7 counted on the acquiescence of the “epistemic communities of fiscal austerity”: the large corporate media and oligopolistic media, industrial business, globalized financial capital, orthodox economists, liberal/conservative parliamentary caucus elected in 2014 and renewed in 2018 (composed of arms, rural and religious caucuses), as well as middle/upper-class movements that articulated themselves through digital media, took to the streets to protest against the government, defend impeachment and call for military intervention (Pinho, 2021). Before officially breaking with the Dilma Rousseff government (2011–2016), Vice President Michel Temer, who was a member of another party in the government coalition, released a document called “A Bridge to the Future” (Uma Ponte para o Futuro) (FUNDAÇÃO ULYSSES GUIMARÃES/PMDB, 29/10/2015), which contained a package of austerity reforms to reduce business costs, revitalize GDP growth, boost economic competitiveness and stem the growth of public debt. Among the main measures, the labor and pension reforms, outsourcing of labor, and Constitutional Amendment No. 95/2016 (or Expenditure Ceiling) stand out (Pinho, 2019, 2021). The parliamentary coup and the break with democracy were consummated in 2016. As already pointed out, one of the main justifications of the liberal economists and policymakers of the Michel Temer government for the promulgation of Constitutional Amendment No. 95/2016 was that it would enable the resumption of growth. Even having formally broken with the government of President Dilma, Temer took over the government after the impeachment. It is necessary to make a brief retrospective of the political economy in that context, which, in 2010, had reached 7.5% of GDP growth during the second Lula government (2006–2010). During Dilma Rousseff’s first term, between 2011 and 2014, there was an average growth of 2.3%, setting a lower standard of performance than the entire Lula da Silva government (2003–2010). From 2015 to 2016, a period marked by a strong political crisis that led to the president’s impeachment, the recession worsened, and GDP fell by more than 7%. On the other hand, between 2017 and 2018, GDP grew by 1.1% (Ramos & de Lacerda, 2020, p. 55). In 2019, already under the Bolsonaro government, the combination of lower interest rates and insufficient stimulation of domestic demand (consumption) were not able to boost economic growth, which remained stagnant, with high unemployment and a GDP growth lower than in 2017  Dilma Rousseff’s impeachment petition, prepared by lawyers Hélio Bicudo, Miguel Reale Júnior, and Janaína Paschoal, was accepted by the president of the Chamber of Deputies, Eduardo Cunha. Dilma was unfairly accused of committing a crime of responsibility for issuing credit opening decrees without the approval of Congress and for “fiscal pedaling,” that is, the delay in the transfer of funds to Caixa Econômica Federal, Banco do Brasil, the National Bank for Economic and Social Development (BNDES), and the Severance Indemnity Fund (FGTS) for the payment of social programs such as the Family Allowance Program and My House, My Life, social benefits such as salary allowance and unemployment insurance, and agricultural subsidies. 7

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and 2018 (DWECK, 2021, p. 249). Therefore, empirical evidence shows that, in the first years of the Expenditure Ceiling, the growth rates of the Brazilian economy were anemic. The fact remains that the Expenditure Ceiling constitutes a radical shift with respect to the trajectory of fiscal austerity reforms implemented during the governments of Fernando Collor de Mello, Itamar Franco, and Fernando Henrique Cardoso (Pinho, 2019, 2021). This is a fiscal rule that does not exist in the rich countries of Europe and in the USA, the most liberal nation on the planet, at least from a discursive point of view, as economist Ha Joon Chang showed in his classic work Kicking Away the Ladder: The Development Strategy in Historical Perspective (Chang, 2004). The exceptional tax regime has brought very negative implications for the country’s Social Security system. Such a budgetary constraint was imposed without establishing mechanisms for concertation and dialogue with society, emphasizing the deepening of austerity, the determination of constitutional limits on public debt, the de-constitutionalization of social rights and, above all, the tearing down of the social democratic construction of the 1988 Federal Constitution (Boschi & Pinho, 2019a, 2019b; Fleury & Pinho, 2018, 2020; Pinho et al., 2020; Pinho, 2021). When the parliamentary coup disguised as democratic legality was carried out (Santos, 2017), the Temer government approved the New Fiscal Regime through broad support from a congressional coalition to which he was subordinate. Once applied, the Brazilian rule would reduce the federal government’s primary expenditure from around 20% of GDP in 2016 to something around 16% of GDP by 2026 or even 12% in 2036. In addition, the new rule does not provide for any mechanism to deal with economic crises or other shocks. On the contrary, it tends to paralyze fiscal policy for two decades and contribute nothing to aggregate demand growth, pulling down GDP growth. In practice, by establishing a permanent spending reduction policy, a contractionary fiscal policy is perpetuated. Different from what the explanatory memorandum of the PEC said, the rule is acyclical, as the expense will be determined independently of the economic cycle (Austeridade e Retrocesso, 2016). Under such a scenario, in order for the overall expenditure ceiling to be met, other expenditures—which range from social benefits such as the family allowance program (Programa Bolsa Família), civil servants’ salaries, expenditures on Science & Technology, the Armed Forces, Legislative and Judiciary, investments in infrastructure, etc.—would need to shrink by almost half in 10 years (from 8% to 4% of GDP or even 3% of GDP in 20 years), which is not feasible as it would affect the functioning of the public system and make funding of basic state functions unfeasible. There is no concern with limiting expenses that do not appear in the primary budget, such as high interest rates—given the mistaken argument of the proposal’s defenders that these would automatically drop under the New Fiscal Regime. This radical austerity policy is deleterious because, (1) from the macroeconomic point of view, it represents an obstacle to economic growth and to the State’s countercyclical action; (2) from a social point of view it means the destruction of the 1988 Federal Constitution and a squeeze on social services, especially education and health; and (3) from a political point of view it removes the power of Congress and society to shape the size of the public budget and, in an undemocratic way, imposes a new

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social pact—with no social legitimacy—around a minimal State (Austeridade e Retrocesso, 2016). For Dweck and Rossi (2016), there will be a strong reduction in the percentage of current net revenues destined for Education (from 18.0% to 11.3%) and Health (from 15.0% to 9.3%) by 2036 (Dweck & Rossi, 2016 apud Fagnani, 2017). The uniqueness of Constitutional Amendment 95/2016 lies in the fact that it deepens austerity policies based on three assumptions: (1) the 20-year duration period is unparalleled in global fiscal policies; (2) once constitutionalized, the intensity of its regulatory rigidity when compared to other countries; (3) the imposition of constitutional limits and penalties of wide scope and rigor that disregard central elements such as economic and/or population growth, recessions, economic, fiscal, and financial crises. The validity of the New Tax Regime, which serves to pay interest on public debt, shows a wide-ranging time dimension, in addition to normative rigor and material coverage (Ramos & de Lacerda, 2020; Tavares & Silva, 2020). The Brazilian fiscal rule, antagonistic to democratic politics, is even more austere than the US Budget Control Act, which withdraws annual resources to compress public spending. Implemented through means of ordinary law, it accounts for approximately half of the Brazilian Expenditure Ceiling and preserves expenses such as the Temporary Assistance for Needy Families, social security, veterans’ benefits, health programs (Medicaid), refundable tax credits, and unemployment. In view of the population increase and the growth of the economic performance of the private sector, which will demand from the public system the expansion of the supply of services in the most diverse sectoral policies, the perspective is that the primacy of the austerity regime for 20 years will converge to the significant fall in the levels of fiscal democracy (Tavares & Silva, 2020). In the face of domestic and international crises, public investments ensured by fiscal policy are fundamental for the reactivation of the economy and production chains. This tends to generate a multiplier effect that leverages private investment. By criminalizing countercyclical fiscal policy, Constitutional Amendment No. 95/2016 does not limit the payment of interest on public debt, further stifling the State’s ability to provide public policies. The contractionary fiscal regime compromises GDP growth, economic competitiveness, investment, and disregards the profile of Brazilian public debt, characterized by high liquidity, short term, and high cost of financing. Consequently, this results in the nominal deficit of public accounts and the deterioration of the fiscal framework (Ramos & de Lacerda, 2020, pp. 70–73). The radical austerity policy ignores the pressing needs of the dispossessed strata and social and citizenship rights, which constitute the majority contingent of the Brazilian population. The New Fiscal Regime was implemented after former president Dilma Rousseff’s tough fiscal adjustment, at the beginning of 2015, when the country was already devastated by cuts in the areas of health, education, housing, and public investment. In addition, it is worth noting the various errors that supported the execution of this exceptional fiscal measure: (1) it conceives the crisis as predominantly fiscal; (2) does not include the profile of public debt and its high cost of financing due to high interest rates, weakening public funds; (3) only GDP growth

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will make it possible to increase collection and the concomitant fall in public debt; (4) includes investments in the austerity regime, which will negatively impact infrastructure, competitiveness, the level of activity and the capacity for growth; (5) considers the retraction of public spending as an end in itself, ignoring social reverberations; (6) blocks the budget for public policies; (7) criminalizes the countercyclical role of public spending and its multiplier effect; (8) ignores the growth and aging of the population as well as the guarantees of the 1988 Federal Constitution; (9) vetoes the expansion of social spending in the long term; (10) macroeconomic policy is interpreted as “domestic economy”; and, finally, reinforces the idea that (11) crises will be overcome by the confidence of market players. The view of fiscal performance emphasizes exclusively the primary result to the detriment of the nominal result, highlighting a limited perspective of public funds (Ramos & de Lacerda, 2020, pp. 74–75). In Brazil, there are earmarked funds, mainly for social spending. The permanent fiscal adjustment policy undersigns the disengagement and the de-financing of social policies, the primary surplus for the benefit of rentiers, and the appropriation of the public fund for the payment of interest, charges, and amortization of the public debt. In addition, this formula benefits the wealthy tiers of society through tax reduction, leverages the profit of companies through tax exemptions and cuts expenses with public servants (Salvador, 2020, p. 376). Between 2016 and 2019, there was a budget growth of only 2.6% above inflation. In the same period, several budgetary allocations earmarked for the Social State and guarantors of rights suffered retraction. The budget focused on citizenship rights— which includes public policies on racial equality, gender, and human rights—fell from 2.17 billion reais (2016) to 1 billion reais (2019), constituting a retraction of 57.44%. Such policies were practically abandoned after 2016. Housing had a drop of 53.87%, which symbolizes the abandonment of housing rights policies. Showing that agrarian reform is also not a priority, agrarian organization dropped 47.34% during the same period. Constitutional Amendment 95/2016 marked the end of the allocation of mandatory funds for education and health, in addition to making cuts in the administration of public exams for higher education teaching and in the budgets of federal universities. In 2019, the federal education budget fell below 100 billion reais and, between 2016 and 2019, suffered a tangible loss of 12.57%, from 112.71 billion reais to 98.54 billion reais (Salvador, 2020, pp. 380–381). The Expenditure Ceiling reduced the costs of labor by 8.85%, whose budget is aimed at paying unemployment insurance installments in the face of the alarming increase in unemployment rates. Health spending had a derisory performance of 0.39%, as it went from 118.63 billion reais (2016) to 119.10 billion reais (2019). The austerity scenario, which dismantles the Brazilian Unified Health System (SUS), was aggravated by the approval of the new financing of basic health care for 2020, which conditions the transfer of resources to the number of patients registered in the health units and not to the covered population contingent (Salvador, 2020, p. 381). The hegemony of financialization is underway in Brazil, which does not have a productive system as the core of economic activity. Quite the contrary, the

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productive sector is increasingly subordinated to banks, unproductive intermediaries, and middlemen. The financial intermediation system, once amalgamated in an oligopolistic fashion, acts to drain, control, or foster human interactions. An example is the increasing privatization and financialization of public policies, as are the cases of health plans, pension plans, supplementary pension funds, insurance, and education companies (Dowbor, 2019, p. 28). The public fund provides subsidies for understanding the current distributional conflict in Brazil, as it played an essential role in the context of the financialization of capital and state reforms. In this sense, it has some functions in the economy: (1) with regard to the public budget, it is responsible for transferring interest and amortizing the public debt to fictitious capital and holders of interest-bearing capital; (2) it provides public policies to support the most vulnerable, insertion in the internal market of mass consumption and provision of rights even for those outside the world of work; (3) the granting of subsidies, tax incentives, and tax exemptions to entrepreneurs (Salvador, 2010, 2020), in addition to public/private partnerships as a means of private appropriation of the public fund. In addition to the appropriation of the public fund by the circuits of globalized capitalism, Brazil coexists with a perverse tax system that makes the sustainable financing of public policies unfeasible. Tax distortion is manifested in taxation on consumption, which represents 68.7%, while taxation on assets constitutes 4.4% of taxes collected. Income tax, on the other hand, which includes workers’ social security contributions, corresponded to 26.86% of the amount collected in 2017. The distributive conflict is evident in the clash between neoliberal macroeconomic policies, on the one hand, and the social rights enshrined in the 1988 Federal Constitution, on the other. The legacy of the post-dictatorship social contract was to create an institutional framework to finance the Welfare State through earmarked budgetary resources and mandatory public spending (Salvador, 2020). Traditionally, the Brazilian State budget prioritized the accumulation of capital to the detriment of investments in social policies. By ensuring funds for social policies, the 1988 Federal Constitution carried out an innovative initiative, with emphasis on the following structure for financing public policies, with funds linked to the Union: (1) the maintenance and development of basic education using up at least 18% of revenues from taxes; and (2) programs such as salary bonus, unemployment insurance, and professional training are financed through 60% of social contributions through taxes. Furthermore, 40% of these funds are passed on to the National Bank for Economic and Social Development (BNDES) to fund development programs. Within the states and municipalities, the consolidation of budgets ensured minimum spending on education and health. The Union, states, Federal Districts, and municipalities now have a minimum expenditure on health. Finally, the social security budget is funded by specific social contributions (Salvador, 2012 apud Salvador, 2020, pp. 373–374). Between 2016 and 2019, the social assistance policy, which is ensured through the payment of income transfer benefits and maintenance of social services to the population, grew by only 5.44%. For the first time since it was instituted in 1996, the transfer program for the elderly and disabled registered, in 2019, a drop in the

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number of elderly people covered. From 2016 to 2019, expenditure on interest and public debt charges grew by 8.5%, while the fiscal and social security budget grew by just 2.6% above inflation. The payment of interest and public debt charges in 2016 corresponded to R$242.61 billion, which increased to R$287.57 billion in 2019, noting a real growth of 22.57%. The fact is that a significant portion of the Brazilian State budget is taken up with the payment of interest and amortization of the public debt (Salvador, 2020, pp. 381–383). The policy of scrapping, cutting, and underfunding the Welfare State has been accompanied by a growing process of privatization/commodification of public policies, with a view to offering, in the market, goods, and services such as retirement plans, health insurance, education, which predominate in the portfolios of institutional investors, particularly pension and investment funds orchestrated by the financial market. In this rentier and speculative logic, social benefits are converted into merchandise, making workers vulnerable to financial crises. The primacy of financial capitalism, the equity paradigm of corporate governance, the political-­ economic power of rentiers, and interest capital enhance the logic of stakeholders/ shareholders and the conversion of social goods into market assets. Universities, health plans, insurance, and pension plans became coveted by capital market investors to increase financial profit margins. At the same time, a deliberate policy of scrapping public health and education services is thriving, in addition to an expressive level of household indebtedness (Lavinas & Gentil, 2018; SALVADOR, 2020), as evidenced by the radical austerity regime.

5 Final Considerations Based on the theoretical-conceptual mobilization of the literature on Political Economy of Development and Public Funding and policy dismantling, the objective of this chapter was to analyze the historical-institutional trajectory of three reforms that had a negative impact on the financing structure and state capacities for public policy provision. The first two occurred during the implementation of the liberalizing measures of the Fernando Henrique Cardoso government and concern, respectively, the Managerial State Reform and LRF/2000. From the perspective of managerial public management, focusing on neoliberal rationality, the first reform sought to suppress the legacy of the National-Developmentalist State, that is, the idea of “burying the Vargas Era” and its heritage of industrialization, productive modernization, and the construction of public institutions and companies. The second reform disciplined federal entities, privatized state banks, and established strict debt rules. It represented a milestone in the inauguration of the fiscal austerity culture. It reproduced the technocratic and insular bias of the Brazilian State in the management of macroeconomic policy, going back to Authoritarian National Developmentalism (1964–1985). It dismantled public service by increasingly making the paradigm of the state civil service structured in the Vargas Era unfeasible. In addition, it strengthened and insulated the economic bureaucracy

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ensconced in the Ministry of Finance, the Central Bank, and the National Treasury from democratic pressures. The uniqueness of the third reform, titled “Expenditure Ceiling” lies in the fact that it was instituted after the parliamentary coup and the break with democracy which raised Michel Temer to power in 2016. The (fallacious) rhetoric suggested by the liberal/conservative coalition was that once approved, the New Fiscal Regime would enable GDP growth, the resumption of financial market confidence, and the stagnation of public debt. In this scenario, Brazil was going through a strong economic crisis arising from the slowdown of the commodities boom and a strong recession that caused GDP to fall 7.2% in the 2015–2016 biennium (O Estado de S. Paulo, 03/07/2017). With the election of Bolsonaro in 2018, an attempt was made to deepen Michel Temer’s fiscalism, in the sense of “creating an institutional framework that prevents the alternation of power from allowing a new ruler to use instruments other than those of a neoliberal logic” (Dweck, 2021, p. 242). Faced with the austerity scenario that began in 2015, and which was deepened with the impeachment of Dilma Rousseff in the following year, a complex liberal-­ conservative coalition erupted. From then on, it manifested a deep ideological commitment to the implementation of dismantling policies. These measures were conceived as feasible alternatives to remedy the supposed “fiscal crisis” of the Brazilian State and ensure budgetary discipline. On the other hand, such a coalition did not face “institutional constraints” (Bauer & Knill, 2014) to carry out the deepening of austerity in view of the creation, since the 2014 elections, of a liberal coalition in National Congress—conservative and reactionary signatories of ultra-liberal, fiscalist, environment-destroying policies, refractory to labor and to minority rights. This parliamentary coalition was renewed in the 2018 elections, in parallel with the expressive retraction of the union bench, which was representative of workers’ interests (Pinho, 2021). In order to deal with the political pressures arising from global financial capitalism for the radicalization of austerity, this liberal-conservative and reactionary coalition (imbued with an authoritarian carapace with Bolsonaro’s rise to power) has been seeking to crumble and asphyxiate public policies as well as its financing mechanisms established with the enactment of the 1988 Federal Constitution. The option of fiscal austerity has changed the very nature of state action. In line with populist governments such as Donald Trump’s in the USA, who conceive the state apparatus and the “administrative state” as something to be exploited (Bauer & Becker, 2020; Brown, 2019), Bolsonaro sabotaged and dismantled the bureaucracy of several sectoral public policies (foreign relations, education, culture, environment, labor, social protection). This shows a predatory policy modality that tests the limits of political institutions as well as the resilience and robustness of the administrative structure of public policies. Finally, I shall summarize three urgent tasks that arise in the current scenario of authoritarianism resurgence with a profound, rapid, and comprehensive dismantling of public policies. Firstly, we must safeguard democracy from the growing authoritarian temptations that lead to the delegitimization and permanent tensioning of democratic political institutions (Congress, Supreme Court, Superior Electoral

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Court, press). Secondly, after the severe economic, political, social, and health crises we have undergone, we must build a progressive political-economic and societal coalition devoted to national reconstruction, as occurred in the post-World War II period and which led to the rise of social democracy in Europe. Thirdly, we must revitalize the institutional framework of public policies and the strengthening of progressive financing mechanisms outside the liberal/orthodox canons. This task, therefore, is urgent in view of the scorched earth scenario and the complete destruction of the institutional fabric of public policies brought on by the Bolsonaro government. Finally, it is appropriate to recapture an idea that is transversal to the central argument of this chapter, which is that the fiscal policy of austerity represented the deconstruction of the spaces of democratic agreement and control of the Brazilian State—which was completed with the 2016 coup d ‘état.

References Abrucio, F.  L. (2007). Trajetória recente da gestão pública brasileira: um balanço crítico e a renovação da agenda de reformas. Revista de Administração Pública, 41, 67–86. Accessed Sep 18, 2020, from http://www.scielo.br/pdf/rap/v41nspe/a05v41sp.pdf Abrucio, F. L. (2003). Os avanços e os dilemas do modelo pós-burocrático: a reforma da administração pública à luz da experiência internacional recente. In Luiz Carlos Bresser-Pereira e Peter Spink (Ed.), Reforma do Estado e Administração Pública Gerencial. Editora FGV. Abrucio, F. L., & Costa, V. M. F. (1998). Reforma do Estado e o Contexto Federativo Brasileiro. Fundação Konrad Adenauer. Austeridade e Retrocesso: Finanças Públicas e Política Fiscal no Brasil. (2016). São Paulo: Fórum, 21; Fundação Friedrich Ebert Stiftung (FES); GT de Macro da Sociedade Brasileira de Economia Política (SEP); e Plataforma Política Social, setembro. Accessed June 09, 2021, from http://plataformapoliticasocial.com.br/wp-­content/uploads/2016/10/ Doc-­AUSTERIDADE_final_ok.pdf Bauer, M. W., & Becker, S. (2020). Democratic Backsliding, Populism, and Public Administration. Perspectives on Public Management and Governance, 3(1), 19–31. Accessed July 20, 2021, from https://academic.oup.com/ppmg/article/3/1/19/5698480 Bauer, M.  W., & Knill, C. (2014). A conceptual framework for the comparative analysis of policy change: Measurement, explanation and strategies of policy dismantling. Journal of Comparative Policy Analysis: Research and Practice, 16(1), 28–44. Bercovici, G., & Massonetto, L.  F. (2006). A constituição dirigente invertida: a blindagem da Constituição Financeira e a agonia da Constituição Económica. Boletim de Ciências Econômicas, XLIX, 57–77. Accessed Sep 19, 2020, from https://digitalis-­dsp.uc.pt/bitstream/10316.2/24845/1/BoletimXLIX_Artigo2.pdf?ln=pt-­pt Boschi, R., & de Lima, M. R. S. (2002). O Executivo e a Construção do Estado no Brasil: Do Desmonte da Era Vargas ao Novo Intervencionismo Regulatório. In L.  W. Vianna (Ed.), A Democracia e os Três Poderes no Brasil. Belo Horizonte: Ed. UFMG (pp.  195–253). IUPERJ/FAPERJ. Boschi, R., & Pinho, C.  E. S. (2019a). Crisis and austerity: the recent trajectory of capitalist development in Brazil. Contemporary Politics, 25(3), 292–312. Accessed June 23, 2021, from https://www.tandfonline.com/doi/full/10.1080/13569775.2018.1555783?src=recsy. Boschi, R., & Pinho, C. E. S. (2019b). Crise Fiscal, Pensamento Empresarial e Financeirização no Brasil: A Desconstrução da Ordem Corporativa no Século XXI.  In R.  Giacalone (Ed.),

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Pensamiento Empresarial Latinoamericano en el Siglo XXI (Vol. 1, 1st ed., pp.  65–94). Universidad Cooperativa de Colombia (Colección Pensamiento Global). Bresser-Pereira, L.  C. (2016). A Reforma Gerencial no Brasil: impactos e desafios. In M.  T. L.  Fleury, M.  R. Loureiro, F.  L. Abrucio, & R.  B. de Mello (Eds.), Capital humano, gestão pública e competitividade. FGV. Bresser-Pereira, L. C. (2003a). Gestão do setor público: estratégia e estrutura para um novo Estado. In L.  C. Bresser-Pereira & P.  Spink (Eds.), Reforma do Estado e Administração Pública Gerencial. Editora FGV. Bresser-Pereira, L. C. (2003b). Da administração pública burocrática à gerencial. In L. C. Bresser-­ Pereira & P. Spink (Eds.), Reforma do Estado e administração pública gerencial. Editora FGV. Bresser-Pereira, L.  C. (1998). Reforma do Estado para a Cidadania. A Reforma Gerencial Brasileira na Perspectiva Internacional (Vol. 34). Enap/Editora. Brown, W. (2019). Nas ruínas do neoliberalismo: a ascensão da política antidemocrática no Ocidente. Editora Filosófica Politeia. Cardoso, J. C., Jr. (2010). Planejamento Governamental e Gestão Pública no Brasil: Elementos para Ressignificar o Debate e Capacitar o Estado. In E. C. Pinto, J. C. Cardoso Jr., & P. de Tarso Linhares (Eds.), Estado, Instituições e Democracia: desenvolvimento. IPEA. Accessed Sep 18, 2020, from http://www.ipea.gov.br/sites/000/2/livros/2010/Livro_estadoinstituicoes_vol3.pdf Chang, H. (2004). Chutando a Escada: A estratégia do desenvolvimento em perspectiva histórica. UNESP. Costa, F. L. (2008). Brasil: 200 anos de Estado; 200 anos de administração pública; 200 anos de reformas. Revista de Administração Pública, 42(5), 829–874. Accessed Sep 18, 2020, from http://www.scielo.br/pdf/rap/v42n5/a03v42n5.pdf Diniz, E., & Boschi, R. (2014). Reforma administrativa no Brasil dos anos 90: projeto e processo. In Gláucio Ary Dillon Soares e Antonio Lavareda (Ed.), A Relevância da Ciência Política: comentários à contribuição de Olavo Brasil de Lima Júnior. Revan. Dowbor, L. (2019). O parasitismo financeiro e seus malefícios. In Antônio Corrêa de Lacerda (Ed.), O mito da austeridade. Editora Contracorrente. Dweck, E. (2021). A agenda neoliberal em marcha forçada. In L. Avritzer, F. Kerche, & M. Marona (Eds.), Governo Bolsonaro: retrocesso democrático e degradação política (pp.  241–254). Autêntica. Dweck, E & Rossi, P. (2016). “A aritmética da PEC 55: o alvo é reduzir saúde e educação”, Rede Brasil Atual, 17 de novembro. Accessed June 09, 2021, from http://www.ie.ufrj.br/intranet/ ie/userintranet/ienamidia/arquivo/061220162534_171116_A_aritmatica_da_PEC_55_o_ alvo_a_reduzir_saade_e_educaaao.pdf Fagnani, E. (2017). O fim do breve ciclo da cidadania social no Brasil (1988–2015). Texto para Discussão, IE-UNICAMP, n° 308, junho. Accessed June 09, 2021, from https://www8.eco. unicamp.br/Publicacoes/textos-­para-­discussao Fleury, S. (2001). Reforma del Estado. Revista de Administração Pública–RAP, 35(5), 7–48. Accessed Nov 04, 2021, from https://bibliotecadigital.fgv.br/ojs/index.php/rap/article/ view/6403 Fleury, S. (2008). Seguridade Social: um novo patamar civilizatório. In B.  Dantas, E.  Crurên, F.  Santos, & G.  P. L.  Lago (Eds.), A Constituição de 1988: o Brasil 20 anos depois–Os cidadãos na carta cidadã (Vol. V, 1st ed., pp.  178–212). Senado Federal, Instituto Legislativo Brasileiro. Accessed Oct 25, 2021, from https://www12. senado.leg.br/publicacoes/estudos-­l egislativos/tipos-­d e-­e studos/outras-­p ublicacoes/ volume-­v -­c onstituicao-­d e-­1 988-­o -­b rasil-­2 0-­a nos-­d epois.-­o s-­c idadaos-­n a-­c arta-­c idada/ seguridade-­social-­seguridade-­social-­um-­novo-­patamar-­civilizatorio/view Fleury, S., & Pinho, C.  E. S. (2020). A Desconstrução da Democracia Social e da Cidadania Urbana no Brasil. In A. Minteguiaga & P. L. Aguilar (Eds.), La disputa por el bienestar en América Latina en tiempos de asedio neoliberal (Vol. 1, 1st ed., pp.  151–181). Conselho Latino-Americano de Ciências Sociais (CLACSO). Accessed June 23, 2021, from http://biblioteca.clacso.edu.ar/clacso/gt/20200921052306/Disputa-­bienestar.pdf

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Fleury, S., & Pinho, C. E. S. (2018). Authoritarian Governments and the Corrosion of the Social Protection Network in Brazil. Revista Katálysis, 21(1), 29–42. Accessed June 23, 2021, from https://www.scielo.br/scielo.php?script=sci_arttext&pid=S1414-­49802018000100029 Giambiagi, F. (2005). Estabilização, Reformas e Desequilíbrios Macroeconômicos: Os Anos FHC. In F. Giambiagi, A. Villela, L. B. de Castro, & J. Hermann (Eds.), Economia Brasileira Contemporânea. Editora Campus/Elsevier. Jordan, A., Bauer, M. W., & Green-Pedersen, C. (2013). Policy dismantling. Journal of European Public Policy, 20(5), 795–805. Kalecki, M. (1987). “Os Aspectos Políticos do Pleno Emprego”, In Crescimento e Ciclo das Economias Capitalistas (2nd ed.). Hucitec. Lavinas, L., & Gentil, D. L. (2018). Brasil anos 2000: A política social sob regência da financeirização. Novos Estudos CEBRAP, 37(2), 191–211. Accessed June 21, 2021, from http://www. scielo.br/pdf/nec/v37n2/1980-­5403-­nec-­37-­02-­191.pdf Lima, O. B., Jr. (2014). As reformas administrativas no Brasil: modelos, sucessos e fracassos. In G. A. D. Soares & A. Lavareda (Eds.), A Relevância da Ciência Política: comentários à contribuição de Olavo Brasil de Lima Júnior. Revan. Loureiro, M. R. (2001). Instituições, Política e Ajuste Fiscal: o Brasil em perspectiva comparada. Revista Brasileira de Ciências Sociais, 16(47), 75–96. Accessed Sep 17, 2015, from http:// www.scielo.br/pdf/rbcsoc/v16n47/7721.pdf Loureiro, M.  R., & Abrucio, F. (2004). Política e reformas fiscais no Brasil recente. Brazilian Journal of Political Economy, 24(93), 53–76. Accessed July 07, 2021, from https://www.scielo. br/j/rep/a/SF3tcw4rHByyxqWCdq6jGjR/?lang=pt# Loureiro, M. R., & Abrucio, F. L. (2002). Incrementalismo, Negociação e Accountability: análise das reformas fiscais no Brasil. In F. L. Abrucio & M. R. Loureiro (Eds.), O Estado Numa Era de Reformas: Os Anos FHC–Parte 1. MP, SEGES. Martins, H.  F. (2002). Reforma do Estado e Coordenação Governamental: As Trajetórias das Políticas de Gestão. In F. L. Abrucio & M. R. Loureiro (Eds.), O Estado Numa Era de Reformas: Os Anos FHC–Parte 1. MP, SEGES. Motta, P.  R. (2007). A modernização da administração pública brasileira nos últimos 40 anos. Revista de Administração Pública, 41, 87–96. Accessed Sep 18, 2020, from http://www.scielo. br/pdf/rap/v41nspe/a06v41sp.pdf Nóbrega, M. (2016). Construção e desmonte das instituições fiscais. In F. Salto & M. Almeida (Eds.), Finanças públicas: Da contabilidade criativa ao resgate da credibilidade. Record. O Estado de S.  Paulo (2017, July 3), Com dois anos de recessão, PIB brasileiro encolhe 7,2%. Accessed July 20, 2021, from https://economia.estadao.com.br/noticias/ geral,pib-­cai-­3-­6-­em-­2016-­e-­confirma-­pior-­recessao-­desde-­1930,70001689773 Pierson, P. (2001). Introduction: Investigating the welfare state at century’s end. In P. Pierson (Ed.), The new politics of the welfare state (pp. 1–16). Oxford University Press. Pinho, C. E. S. (2021). Welfare State and Epistemic Communities of Fiscal Austerity in Brazil: from Lula da Silva to Jair Bolsonaro (2003–2020). Sociedade & Estado, 36(1), 195–216. Accessed June 20, 2021, from https://www.scielo.br/j/se/a/GqvHyvFSkFSNyJf7K7V9jkx/ Pinho, C.  E. S. (2019). Planejamento Estratégico Governamental no Brasil: Autoritarismo e Democracia (1930–2016). Editora Appris. Pinho, C. E. S., Fleury, S., & Lanzara, A. P. (2020). Dossiê Temático “Instituições, Políticas Públicas e Desenvolvimento em Tempos de Pandemia Global”. Revista Ciências Sociais UNISINOS, 56, 2. Accessed June 23, 2021, from http://revistas.unisinos.br/index.php/ciencias_sociais/issue/ view/869 Praça, S. (2016). A prática das Leis de Diretrizes Orçamentárias (LDOs) no governo federal brasileiro (1989-2010). In F. Salto & M. Almeida (Eds.), Finanças públicas: Da contabilidade criativa ao resgate da credibilidade. Record. Prates, A. A. (2007). Administração pública e burocracia. In Lúcia Avelar e Octávio Cintra (Ed.), Sistema Político Brasileiro: uma introdução. Fundação Unesp Editora.

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Presidência da República. (1995). Plano Diretor da Reforma do Aparelho de Estado. Câmara da Reforma do Estado, Ministério da Administração Federal e Reforma do Estado. Accessed Oct 18, 2021, from http://www.bresserpereira.org.br/view.asp?cod=121 Ramos, A. P., & de Lacerda, A. C. (2020). A Emenda Constitucional (EC) 95 e o engodo do Teto de Gastos. In A. C. de Lacerda (Ed.), O mito da austeridade. Editora Contracorrente. Rezende, F. (2011). Planejamento no Brasil: auge, declínio e caminhos para a reconstrução. In J.  C. Cardoso Jr. (Ed.), A Reinvenção do Planejamento Governamental no Brasil. IPEA. Accessed Sep 18, 2020, from http://www.ipea.gov.br/agencia/images/stories/PDFs/livros/livros/livro_dialogosdesenvol04.pdf Ribeiro, I. R., & Salvador, E. (2018). Hegemonia e políticas sociais no Brasil: contribuições ao debate sobre vinculação orçamentária. Revista Katálysis, 21, 1. Accessed June 23, 2021, from https://www.scielo.br/scielo.php?script=sci_arttext&pid=S1414-­49802018000100076&lng= pt&tlng=pt Santos, W. G. (2017). A democracia impedida: o Brasil no século XXI. FGV Editora. Salto, F., & Almeida, M. (2016). Introdução: Responsabilidade fiscal é a chave para voltar a crescer. In F.  Salto & M.  Almeida (Eds.), Finanças públicas: Da contabilidade criativa ao resgate da credibilidade. Record. Salvador, E. (2020). Fundo público e conflito distributivo em tempos de ajuste fiscal no Brasil. In J. A. de Castro & M. Pochmann (Eds.), Brasil: Estado social contra a barbárie. Fundação Perseu Abramo. Accessed June 20, 2021, from https://fpabramo.org.br/publicacoes/estante/ brasil-­estado-­social-­contra-­a-­barbarie/ Salvador, E. (2017). O desmonte do financiamento da seguridade social em contexto de ajuste fiscal. Serv. Soc. Soc., 130, 426–446. Accessed June 23, 2021, from https://www.scielo.br/j/ sssoc/a/mT566rdLKQ8crx5qQ4z7W9k/?lang=pt&format=pdf Salvador, E. (2012). Fundo Público e o Financiamento das Políticas Sociais no Brasil. Serviço Social em Revista (Online), 14(2), 04–22. Accessed May 11, 2021, from https://www.uel.br/ revistas/uel/index.php/ssrevista/article/view/12263 Salvador, E. (2010). Fundo público e políticas sociais na crise do capitalismo. Serviço Social & Sociedade, 104, 605–631. Accessed June 23, 2020, from https://www.scielo.br/scielo. php?script=sci_arttext&pid=S0101-­66282010000400002&lng=pt&tlng=pt Souza, C., & Fontanelli, F. (2021). Antídotos institucionais do federalismo brasileiro: a Covid-19 mudou a dinâmica federativa? In L.  Avritzer, F.  Kerche, & M.  Marona (Eds.), Governo Bolsonaro: retrocesso democrático e degradação política (pp. 135–150). Autêntica. Streeck, W. (2018). Tempo Comprado: A Crise adiada do Capitalismo Democrático. Boitempo. Tavares, F., & Silva, G. (2020). A Ciência Política Brasileira Diante do Novo Regime Fiscal: Para uma Agenda de Pesquisas sobre Democracia e Austeridade. DADOS–Revista de Ciências Sociais, 63(2). Accessed June 9, 2021, from https://www.scielo.br/scielo. php?script=sci_arttext&pid=S0011-­52582020000200203 Tollini, H.  M. (2016). Repensando a gestão das finanças públicas no Brasil. In F.  Salto & M.  Almeida (Eds.), Finanças públicas: Da contabilidade criativa ao resgate da credibilidade. Record. Fundação Ulysses Guimarães/PMDB. (2015, Oct 29). Uma Ponte para o Futuro. Accessed July 19, 2021, from https://www.fundacaoulysses.org.br/wp-­content/uploads/2016/11/UMA-­ PONTE-­PARA-­O-­FUTURO.pdf

Part III

Employment and Social Security

Chapter 3

Labor Reforms and the Crisis of Democratic Corporatism Ronaldo Teodoro

1 Introduction The relationship between capitalism and democracy is found in the Welfare States of the post-war period a historical synthesis that is being openly threatened at present. In studies about the founding of these democratic States, the substantiality of trade union struggles, and the social rooting of so-called mass parties became important in explaining how the correlations of political forces established different state experiences. Variations in the design, scope, and effectiveness of social policies were essentially categorized into three state forms: the contributory-corporatist standard, the residual-liberal form, and the social-democratic design (Esping-­ Andersen, 1990). Field studies produced the organic understanding that the growing institutionalization of the political conflict consolidated itself into a historical form of democratization of power in complex and heavily industrialized societies—a combination of prosperity, democracy, and advanced capitalism. Through this understanding, the regulation of conflicts between the interests of capital and labor became a vital moment to boost various dimensions of citizenship in contemporary democracies, whose search for a regulated “wage society”—of full employment— went against the unpredictability and social risk of market relations (Castel, 2003). In the 1980s, theories that emphasize the social mobilization of power and the specificities of institutional trajectories became influential in the field of Welfare State interpretations, expanding the theories of economic convergence dominant in the 1950s. As such, they became central to the understanding of the causal principles of formation, expansion, and diffusion of democratically regulated capitalism. However, in the 1990s, instead of explaining the advance, these theories would be R. Teodoro (*) Rio de Janeiro State University, Rio de Janeiro, Brasil e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Fleury (ed.), Social Policy Dismantling and De-democratization in Brazil, Societies and Political Orders in Transition, https://doi.org/10.1007/978-3-031-35110-5_3

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increasingly challenged to understand the signs of retraction of the Welfare States. In this context, the neoliberal propaganda began to declare the unfeasibility of the Swedish universal model as a historical goal, affirming the unavoidable global tendency to adhere to the American residual model. Considering the various meanings of this crisis of constitutionalization of Welfare States, reflections turned to the investigation of the type of change underway—the meaning, the rhythm, and the depth of the transformations. At the same time, the field’s very theoretical foundations became the subject of questioning. Studies such as those by Paul Pierson (2001), for example, initially dedicated to understanding the historical durability of Welfare States, turned decisively to the identification of transformation movements in capitalism’s central countries, where principles such as recommodification, cost containment dynamics, recalibration, or adaptation of their policy structures began to stand out. In Brazil, studies on the formation, development, and impasses of social policies have always relied, to some extent, on the theoretical and analytical references developed in the vast international literature focused on the investigation of the modern Welfare State. This influence, however, rarely resulted in a passive reception or some sort of acritical theoretical mimicry on the part of the main authors of this intellectual production at the national level. The consideration of the particularities of the Brazilian formation, such as the dependent nature of its economy, its productive structure, the discontinuity and ruptures of public institutions, the fragmentation of parties and social movements, or even the characteristics of Brazilian federalism, have always mediated the critical thinking regarding the uncertain construction of a Welfare State in the country. More recently, we add to this culture of critical dialogues the theoretical lens of decolonial and feminist studies, which renew—with some originality—the understanding of social inequalities in the country by mobilizing important concepts such as structural racism and patriarchy. As part of this process of theoretical and analytical approximation, it is possible to identify that, in Brazil, the interpretations of workers’ political struggles and the institutional form of their rights have never had the prestige that international literature attributes to the experience of classist conflicts experienced in the democratic formation of the central countries of capitalism. At the center of this discomfort, the corporatist meaning of the Consolidation of Labor Laws—the CLT1—and its arrangement of trade union legislation and Labor Court, was, not infrequently, perceived as a central obstacle to the democratic realization of social legislation in the country. In its interpretative pluralism, it would be possible to identify at least five influential critical theses to this labor dimension of the rights established between 1930 and 1945, in the so-called “Vargas Era”: (i) one that perceived the CLT as a populist instrument for co-opting the struggles of trade unions and social movements by the State and business sectors (Weffort, 1978); (ii) the argument that such rights were illegitimate privileges granted to a few social segments (Schwartzman,  The Consolidation of Labor Laws, promulgated by Decree-Law No. 5,452/1943, has as its founding premise the protection of the social value of labor, from which it establishes the rules that regulate individual and collective labor relations–housing the parameters of the regulation of unions and the functioning of the Labor Court in Brazil. 1

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1982); (iii) the point that it was a “State unionism,” compromising the creation of genuine political representation of the country’s workers (Boito Jr., 2006); (iv) the formulation that understood it as part of a nationalist ideology, whose arrangement generated deep impasses to the transition of the country into the “modernity of international capitalism” (Cardoso, 1975); and (v) the notion that the association of an important part of social benefits—such as health services and retirement—to labor rights consisted in an “insurance logic,” a “regulated citizenship” to be overcome by a political citizenship (Santos, 1979). Through distinct theoretical and normative paths, what is common to these readings is the challenge of the corporatist principle present in the regulation of labor rights in Brazil. Averse to democracy, this regulation would be an obstacle rather than a solution to the modern constitutional challenge of concerting conflicts arising from labor relations. The legacy of these critical interpretations, strengthened in the 1970s, following the 1964 civilian-military coup, proved to be relatively influential in the political struggles that led to the re-democratization of the Brazilian State in the 1980s, establishing the expanded understanding that it was necessary to overcome this Varguista [relating to the Getúlio Vargas era]—corporatist—statist legacy, which dominated labor rights up until that point. In the 1990s, the pressure to transform this institutional apparatus that regulated labor rights entered the agenda of major state reforms, presupposing a necessary modernization in the face of growing economic globalization at an international level. Seeking to visit this interpretative legacy and challenge its theoretical and normative foundations, we hypothesize that the so-called labor reforms carried out since 2017, in the ultra-conservative governments of Michel Temer and Jair Bolsonaro, act primarily as a direct attack on this criticized corporatist structure of rights. More than specific changes, this relates to a process of change in the nature of the State, whose essence can be described as the repeal of the central aspects that guaranteed support to the public and collectivist guidance of hiring. Through this understanding, the so-called “Labor Reforms” defined the growing privatization of power, reinstitutionalizing a legal apparatus that produces a substantive expansion of the asymmetries of power between owners and workers. If, in fact, the constitutionalization of labor rights is a founding moment of modern democratic States, the reforms underway in Brazil should be perceived as a route headed to social collapse. Following this hypothesis, the understanding of recent changes in labor regulation poses two important challenges. The first one, regarding the domain of historical reflection, imposes the need to investigate the relationship between corporatism, labor rights, and the existence of Welfare States, which, in the Brazilian context, follows a trajectory of deep controversies. Secondly, in the realm of political theory, there is a need to locate how anti-corporatist changes attack the democratic form of labor regulation in the country. Seeking to develop this argument, in the first section of this chapter we retrieved part of the international literature that dealt with the centrality of labor rights for the understanding of the formation and stability of contemporary Welfare States. As part of this effort, we problematized the reception of this debate in the reflections of Brazilian political thought pointing out how corporatism took on a central role in

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the understanding of labor legislation, working class struggles, and the very creation of the Brazilian State. In the second section of the chapter, we analyze the foundations of contemporary changes in labor legislation, especially in the post-2016 conjuncture. The anti-corporatist meaning of these reforms is understood from three dimensions: (i) the flexibilization of the forms of collective hiring that violate the labor stability statute; (ii) the political and economic weakening of trade union organizations; (iii) the restriction of access to Labor Courts and other public control bodies. By way of conclusion, we establish the limits of our reflection and make considerations about the relevance and insufficiencies of corporatism in preventing the asymmetry of power between employers and workers and progress on the democratic parameters of labor relations.

2 Labor Rights and the Shaping of Contemporary Welfare States The disaggregation of institutionalized labor rights has been pointed out, since the 1980s, as a worldwide phenomenon that varies, nevertheless, as to its level of radicalism, scale, and pace, in different continents and countries (Silver, 2005). This structural phenomenon can be understood as the reversal of the global trend of expansion of social security policies for workers that had been observed since the 1920s. With this historical shift, the theories that highlighted the relevance of labor—its regulation and political struggles—for the establishment and stabilizing of democracy virtually lost its penetration in the studies of capitalist political economics. The sentiment, as William Sewell (1993, p. 15) identified, is that “the study of the history of workers [had lost] some of its urgency.” Under this new historical and reflective horizon, the weakening of the political subjects from the “Fordist industrial” era—such as the workers’ movements and political party mass structures—fostered skepticism regarding the lifespan of the democratic character of capitalism. At the center of this new interpretative cognition, the phenomenon of economic globalization became transversal to the theses that value technological transformations that form a post-industrial society, the hypermobility of international capital and the weakening of the sovereignty of modern States (Silver, 2005). At the socio-political level, we believe that the depreciation of labor brings back to the table the relationship between the institutional breakdown of labor rights and the classic theme of social cohesion. As per Fábio Wanderley Reis (2001), in the twentieth century, the solution for the basic constitutional problem of societies would have been solved, to a large extent, with a “combination of prosperity and democracy made possible by advanced capitalism.” In this historical turn of events, the political recognition of labor issues became central to public order. Contrary to this movement, the current subversion of this “constitutional complacency” achieved around the modern distributive conflict can be read as a phenomenon of

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delegitimization of a founding component of the contemporary national State, which are the labor rights. The centrality of labor for the formation, dissemination, and stability of Welfare States is a theme common to many classical works. The work of influential politologist Adam Przeworski and the political sociology of Gosta Esping-Andersen and Claus Offe point to particular and interesting paths to this understanding. In the book Capitalism and Social Democracy, Przeworski (1988) interprets that the historical success of democratic States in the twentieth century was due to the “class commitment” instilled in the socialist tradition that replaced the path of revolutionary confrontation with the electoral participation of the working class. In practical terms, the political deradicalization of class confrontation was accompanied by the incremental institutionalization of the social protection of workers, changing the terms of national income redistribution from the institutional construction of full employment policies and wide-reaching social programs. On a less optimistic note regarding the democratizing inclinations of capitalism, in Contradictions of Welfare State, Claus Offe’s (1982) political and economic theory raw material was the association between the institutionalized arrangement of market relations and collective union action and other political agents such as socialist parties and industrial coalitions. In the author’s words, “a peace formula of advanced capitalist democracies for the period following World War II” was that “the welfare state is based on the recognition of the formal role of labor unions both in collective bargaining and the formation of public policy” (Offe, 1982, p. 7). In the work of Gosta Esping-Andersen (1985), the centrality of labor and its political issues for the understanding of the historical rise of the social and economic structure of the Welfare States stemmed from his theory of the mobilization of power. With the book Politics Against Markets: The Social Democratic Road to Power, the understanding of the processes of mitigation of class conflicts and the growing institutionalized balance in the asymmetrical relations between labor and capital, appears as a key moment for the overlapping of the disruptive political struggles that marked the nineteenth century and the first half of the twentieth century. The identification and valuing of neo-corporatist (tripartite) decision-making systems carried out by representatives of highly centralized employers’ organizations and trade unions under the supervision of specialized state agencies run transversally to these studies. The recognition of the importance of corporatist experiences in harmonizing conflicts and their consequent democratic stabilization was at the center of Arendt Lijphart’s (1999) important book Models of Democracy. Based on a comparative analysis of 36 countries, the author points out in this study that the so-called “consensus democracies” were superior to the “majoritarian democracies.” Among the striking differences between these standards of state regulation, the author points out that in the consensus model the existence of “coordinated” and “corporatist” systems guaranteed more stable and effective pacts, commitments, and concertation to the construction of social well-being, unlike deregulated competition between groups.

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Keeping certain particularities in mind, the aforementioned authors converged to the conclusion that corporatist arrangements were not only present at the time of the formation of the Welfare States but were decisive for the stability and expansion of the democratic form of the State in the post-World War II era. More than the interpretative variations between these authors, it is important to highlight the analytical centrality of organized interest groups, and the political prominence of decisions concerted by tripartite corporatist leaders defined from the State, transposing, in many cases, the influence of the political parties themselves (Lijphart, 1999).2 As we are seeking to formulate, such experiences were vital to face the power inequalities in industrialized capitalism.

3 Interpretations of the Institutionalization of Labor Rights in Brazil The categories created by the interpreters of class conflicts in the democratic formation of capitalism’s central countries—such as the presence of corporatist arrangements, the performance of trade unions and leftist parties, and the relationship between labor rights and citizenship—did not attain the same historical-normative meaning in Brazilian social sciences. The country’s politico-economic particularities—such as the dependent condition of the national economy, the backwardness of its productive structure in the world market context, and the frailty of public institutions in the face of conjunctures of political crisis—contributed to this critical appropriation. Under this condition, a theory of history and democracy that considered the relevance of popular segments, their struggles, ideas, conflicts, and participation in the field of political construction, was not fully established. Faced with the challenge of interpreting periods of authoritarian power and the oligarchic nature of the State, it was not rare to emphasize “the distance that separates the Brazilian [social] experience from that of other countries” (Bignotto, 2020). In its interpretative theoretical pluralism, the institutional solution to the conflict between capital and labor formed theses of ample influence, which, we will call here the “anti-Varguista paradigm.”3 From 1930 onward, Getúlio Vargas’ presence in national life transformed the structure of the State profoundly and can be

 As Lijphart (1999) pointed out, rather than suggesting a country of fascist experience, this condition was recognized even in Switzerland. Quoting Lehbruch,  the author points out that “the strength of leadership associations in Switzerland is remarkable, and it is almost a consensus that the cohesion of Swiss interest associations is superior to that of political parties in that country” (Lehbruch, 1993 as cited in Lijphart, 1999, p. 52). 3  The period between 1930 and 1946 is usually recognized as the first step in the establishment of the Vargas Era. After this period, Getúlio Vargas returned to the country’s presidency in the 1954 election but did not complete his term, committing suicide in 1956. To understand its undeniable influence on national life, see the book Ex-Leviatã Brasileiro [The Former Brazilian Leviathan], by Wanderley Guilherme dos Santos (2006). 2

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considered a concise initiative of facing the country’s basic constitutional problem of political construction and development (Reis, 2009). As a “watershed,” the Vargas Era has always inspired ambivalent passions since it contained aspects of arbitrary power, which limited the political organization of unions, as well as guidelines for the strengthening of labor in opposition to employers (Santos, 2015). Faced with this ambiguity, following the 1964 Civilian-Military Coup, the consolidation of openly negative interpretations of the previous political formation can be identified with a predominance of readings that attributed to the experiences started in the 1930s as the central reasons for the political decline of contemporary Brazil. Within the anti-Varguista paradigm, objections to the relationship established between citizenship and labor can be recognized in the following interpretations: (i) the one in which the CLT appears as a populist instrument of co-optation of trade unions and social movements (Weffort, 1978); (ii) the notion that labor rights are notarial, illegitimate and patrimonial privileges (Schwartzman, 1982); (iii) the argument that union corporatist law instituted “state unionism,” corrupting the genuine organization of workers (Boito Jr., 2006); (iv) the assessment that associating social benefits to labor rights consisted in a regulated citizenship, blocking a political citizenship (Santos, 1979); (v) the formulation that this model of relationship between citizenship and labor was a nationalist ideology, harmful to the country’s transition into the “modernity of international capitalism” (Cardoso, 1975). Taking certain particularities into account, in general, this set of critical readings addressed the corporatist nature of union and labor legislation—such as the compulsory tax charged to union associates, the State terms of the regulation of collective agreements and negotiations between employers and employees, the regulation of unions by the Ministry of Labor, and the normative presence of the Labor Court in conflicts between capital and labor. The thesis that associates corporatism with populism finds one of its greatest disseminators in Francisco Weffort, 1972, 1978. In its polysemic meaning, the concept of populism appeared, on the one hand, associated with political culture, highlighting the way in which the working classes were integrated into the political process in Brazil. On the other hand, it was presupposed as an effect of union corporatist institutionality, where collaboration between classes was fostered through the granting of social policies. In both cases, however, the term denotes an alleged perversion of consciences whose origin was found in “Vargas’ paternalistic association with the working masses, […] a constituting element of the populist regime in Brazil” (Weffort, 1978, p. 67). For James Malloy (1977), for example, the corporatist co-optation, patrimonialism, and populism disseminated in national life defined the unfair and segmented framework of the retirement system developed in the country. Through this interpretation, the model consisted of a concession of corporatist privileges distributed according to the type of professional occupation, which elucidated, at the political level, a broad process of co-opting the mass of workers, concentrating power in the realm of the State. The democratic illegitimacy of this State granting of benefits to specific groups was based on the concession of “special social and economic rights to workers, outside of the market” (Schwartzman, 1977, p. 102).

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In an influential interpretation, historian José Murilo de Carvalho (2002, as cited in Moreira and Santos, 2020, p.61), in his well-known book Cidadania no Brasil: o longo caminho [Citizenship in Brazil: the long path], points out that Vargas’ social policies—forged in the type of labor regulation—consolidated a lasting national “vice”: “the tradition […] that sought improvements through an alliance with the State, through direct contact with public authorities. This attitude could be better characterized as ‘statenship’”. Another important critical thesis on the social structure forged in the Vargas Era is to point out the vices of the so-called “State unionism in Brazil.” This reflection stems from the criticism that the type of regulation built on the conflict present in labor relations jeopardizes the freedom of organization and the autonomy of unions. In essence, the statute of the single official union—or union unity, as per which each professional category has but one representative union—is criticized, as is the trade union contribution tax, which consists of charging even non-unionized workers, and the Labor Court, which has the power of guardianship to resolve negotiation conflicts. All these corporatist aspects, instituted by the 1931 Trade Union Law, have remained even after the 1988 Federal Constitution, “largely thanks to the attachment of most trade unionists to this structure” (Boito Jr., 2006, p. 2). The notion that trade unions and labor legislation conformed to the stratification of social rights defined yet another important interpretation. For Wanderley Guilherme dos Santos, state intervention in the “regulation of professions, of the work record booklet and of the public union” defined the scope of a “regulated citizenship” (Santos, 1979). Following this concept, access to retirement and health services defined from the link with professions would replace the expansion of political citizenship that would be based on the “values inherent in the concept of community member” (Santos, 1979, p. 75). Understood in this way, the employment contract regulated by the State would make the work record booklet, “more than a proof of employment, a certificate of civic birth” (Santos, 1979, p. 76). It is important to highlight, however, that unlike other critical theses pointed out, for Wanderley Guilherme the Vargas Era, and more precisely labor rights in Brazil, constituted a long process of removal of workers from the “unlawful confinement” that characterized power relations within the capitalist company. Seen from another perspective, the CLT arrangement, the trade union legislation, and the stratified system of rights would have been forged in association with an ideological agenda that connected social issues and labor rights to a national project. As a peripheral country, national sovereignty (partly understood as an effort at its own industrialization, via State investment) became a source of deep analytical controversy and the realm of strong political and social polarization. In the reflections of Cardoso, 1975 and Schwartzman (1977), for example, the content of the criticism is organized around the denunciation of the nationalist and developmentalist inclinations in which the institutionalization of social and labor issues was inserted in the country. In the classic Dependency and Development in Latin America, Cardoso and Faletto (1975) point out that “national statist patrimonialism” restored decisive impasses to the country’s transition to the “modernity” of the capitalist market, defining the “national isolationism to international integration.” In

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Cardoso’s (1975) reflections, between 1930 and post-1964, the institutional structure of social rights in force in the country triggered the transition from “authoritarian populism” to a “technocratic authoritarianism.” With the exception of Wanderley Guilherme dos Santos (1979), for these critical theses, the “Varguista social heritage” was never considered a way of constructing a collective identity, of focusing on individual expectations of social inclusion and a sense of belonging in a chronically segmented society (Reis, 2009; Cardoso, 2010). The criticized retirement system established in the 1934 Federal Constitution followed what was happening internationally in the first half of the twentieth century, in which the demands of more politically organized workers enshrined a decisive expansion of the State on the private and voluntary form of the historically previous care model. It is undeniable that the trade union legislation implemented from 1930 onward contained provisions that maintained or accentuated asymmetries of power between employers and employees, such as the “certificate of ideology” and the “prohibition of the right to strike,” which, from the period beginning in 1946, were suppressed or lost any practical effectiveness, such as the “union letter.”4 The existence of the law, as Fortes (1999) observes, did not necessarily define the guarantee of the right, but rather a “field of possibilities,” of intense conflicts around its actual exercise. The theses inscribed in the anti-Varguista paradigm, once again with the exception of Santos (1979), did not open themselves to the understanding of the ambiguities of this historical experience as a possible expression of a political conflict inscribed in asymmetrical relations of power. In these readings, as formulated by historians Gomes and D'araújo (1993), the “union and labor solution” for achieving citizenship rights was not emphasized as a way of removing the “social problem” of the “private right to production,” of family or religious responsibility for care, of expanding the public parameters of regulation and control over a property (Gomes and D’Araújo, 1993, pp. 317–52). For the critical paradigm dominant in the 1970s and 1980s, the Brazilian corporatist arrangement was not read as a historical variant of the constitution of sovereignty which every modern State aimed to achieve, to some extent. As Reis (2009) observes, the regulation of labor in Brazil, although precarious and contradictory, constituted a substantial advance in addressing the basic constitutional problem that besieged most countries that became industrialized in the twentieth century. From the 1950s to the 1970s, the theory of modernization5 became the intellectual ethos of the time. Convergent with many Brazilian authors, in the 1970s, studies

 The “certificate of ideology” was a document issued by the Department of Political and Social Order (DOPS) to various associations of political representation, such as political parties, student organizations, trade unions, and others; it was waived in 1952 (Gomes, 1988). The “union letter” is the registration made with the official body that grants the status of legal entity to the collective representation of workers in a professional category. 5  Modernization theories have become an interpretive paradigm, a standard of predictive analysis of Western modernity in different societies. In its theoretical polysemy, the modernization of countries combined the deepening of market economies, translated by urbanization, industrialization, 4

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by Brazilianist thinkers found significant penetration in the national debate about institutionalized labor rights from the 1930s. Works such as Still the Century of Corporatism and Interest conflict and political change in Brazil, both by Phillippe Schmitter (1971, 1974), or Authoritarian Brazil: origins, policies, and future, by Stepan (1976), and The new authoritarianism in Latin America (1979), organized by David Collier and Cardoso (1979), exemplify a context in which the Brazilian political experience was framed as a case within the broader typology of authoritarian and corporatist statization of rights in the Southern cone (Moreira and Santos, 2020). This formation of the Brazilian State created an impasse for the theories of modernization in which industrial development would converge into the formation of liberal democratic States. In terms of “civic culture,” the countermodern character of Brazil and other Latin American countries, was thus interpreted by Howard Wiarda (1973, p. 209): They remained cut off and isolated from these modernizing currents, at the margin of the ideological trends and socio-political movements taking place elsewhere in Europe, fragments and remnants of a peculiarly Iberic-European tradition dating from approximately 1500, with a political culture and a socio-political order that at its core was essentially two-­ class, authoritarian, traditional, elitist, patrimonial, Catholic, stratified, hierarchical, and corporatist.

The Iberian tradition into which the countries of the region would be inserted constituted a kind of political nature, an unchanging essence. It is notable, however, that Brazilianist studies of comparative politics, when pointing out the country’s limits in advancing toward the expectations of political modernization and democratization, disregarded, as a rule, international intervention, particularly by the USA, in favor of the conservative agendas implemented by dictatorships in the region. Exclusionary, statist, authoritarian, segmented, and nationalist, the period from 1946 to 1964, would become classically perceived as a “Populist Republic”—a synthesis of the decline of an era, going against the flow of modernity underway in capitalism’s central economies. In contrast to this aggregate of errors, while the labor experiences of Europe and the USA represented successful cases of neo-­ corporatist arrangements, in Brazil—and in many Latin American countries—traditional, statist, and authoritarian corporatism would prevail (Moreira  and Santos, 2020). It follows that from the perspective of political liberalism, the “Varguista social heritage” would have interdicted the country’s genuine entry into the constellation of modern Welfare States. The recovery of this debate, its contextualization and the effort to identify its theoretical-normative foundations seem important to us for its influence and the organicity achieved at the time of the country’s re-democratization beginning in the 1980s. With the end of the civilian-military dictatorship initiated in 1964, an agenda of reforms aimed at overcoming state planning in the economy through the privatization of public companies and the deconstruction of the labor legislation, became

and cultural de-traditionalization, from which one can infer a possible evolution toward a democratic, liberal, and rational state.

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a historically consistent program. The new framing between democracy and the market forces was complemented by the incorporation of national and international modern financial capital interestings (Moreira  and Santos, 2020). The success of this political-programmatic direction, established as a public agenda at the internal level, finds the international pressure of market globalization in the 1990s, reinforcing the long crisis of statist and national sovereignty theses in which regulated labor was a principle. In this sense, the construction of the Brazilian Welfare State after re-­ democratization (1985–1988) has always been pressured by the alleged challenge of adjusting the Brazilian State to international competitiveness. At the core of this agenda, new and old theses against labor rights were established such as the argument of their cost for national production, which discourages foreign investments; the rigidity of labor norms in the face of the efficiency required by new production processes; the self-reported condition of the structure and union representation, and, more recently, the argument of privileges, which would place labor rights against the self-interest of the consumers and the poorest. In this socio-political scenario, as documented in the chapter by Arnaldo Lanzara, currently, the classical policies that value labor are increasingly being replaced by an agenda of “employability without rights.” Perhaps it is indeed a side-effect of the virtual replacement of the agenda of full employment with preserved rights, for multiple forms of temporary contracts without stability, increasingly negotiated individually and within production units. If we are correct in locating the corporatist institutionalization of labor rights as part of the founding moment of equating and stabilizing the constitutional problem of modern States, the recent changes that have come about post-2016 pose direct challenges to democratic stability. As noted by Reis (2001), studies on governability, typically concerned with the balance of relations between the Executive and Legislative powers, with emphasis on issues such as party fragmentation, should extend this understanding to the way the issues of labor and capital are increasingly establishing confrontations outside of democratic legislation. In the next section, we seek to substantiate the understanding that the ongoing transformations in Brazilian labor legislation contain this sense precisely because they redirect the corporatist axis that equated labor relations in Brazil since the 1930s.

4 An Analysis of the Anti-corporatist Meaning of Labor Reforms The labor reforms underway since 2017 should be understood as a set of initiatives that have disarticulated central principles of the corporatist orientation present in Brazilian labor relations over the last 90 years. Under this condition, a mosaic of changes imposed itself, such as the fraying of labor stability in employment, the attack on the financial support of unions and their participation in negotiation processes, the permission given for negotiation over the legislated right, and the

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restriction on the gratuity of the Labor Court. These aspects, which constitute the 2017 and 2019 Labor Reforms, have expanded the general degradation of labor conditions and radicalized social inequalities, whose depth make us question the very stability of Brazilian democracy. The transformations in labor relations in Brazil will be analyzed here from the legal interventions carried out in the country after 2016, especially Labor Reform Law 13,476/2017, Law 13,429/2017, or the “Unrestricted Outsourcing Law,” and Law 13,874/2019, then made public under the suggestive epithet of the law of “Economic Freedom” or “Property Rights.” The examination of this legislation will not be accompanied here by an exhaustive analysis of the changes underway—not least because, as we will see, the Federal Supreme Court (STF) revoked an important part of these changes. Our ambition consists only in pointing out that the degradation of labor rights occurs around the destructuring of important aspects of corporatist legislation, recomposing, from there, the bases for the private reproduction of the corporatist power of labor contracting. It should also be noted that the accelerated process of deconstitution of labor rights, post-2016, should not give rise to the understanding that there have been no substantial changes within the scope of the CLT in previous times. The political meaning of the current changes is, in fact, as old as the CLT itself. The new element, however, consists in the political conditions—the strategies and strength of the coalition—that defined the depth and intensity of the changes undergone in this institutional framework. As we will try to demonstrate, the impact of these changes redefined the forms of hiring, dismissal, and regulation of working hours, expressing a deep recomposition of the control of private employers over the public domain which, for better or worse, formerly defined labor contracting. In summary, the anti-corporatist political nature of the new regulation broadens the asymmetry of power, challenging the constitutional complacency of conflicts arising from labor relations. In 2016, even before promulgating the Labor Reform (Law 13,467/2017), then President Michel Temer sent the so-called “Unrestricted Outsourcing Law” (Law 13,429/2017) to National Congress, managing to pass it in record time. In essence, outsourcing consists in a situation that redefines the legal bases for hiring workers between two or more companies (service provider and client), and which directly affects the stability of workers in employment. From 2017 onward, with the subsequent endorsement of the STF, outsourcing was allowed for any activity carried out within a company or public administration service, including for “core business activities,” hitherto prohibited (Neto & Silveira, 2019). Unrestricted outsourcing was an old demand of the country’s employers. Since 1988, outsourced labor, restricted to companies’ non-core activities, represented lower employment costs, longer work hours, and lower wages. However, in addition to these economic dimensions, its most striking political meaning consists in expanding difficulties for collective union representation, essentially due to the instability of the employment relationship. According to a technical note published by the Inter-Union Department of Statistics and Socioeconomic Studies (DIEESE, 2017), in 2014, for every 100 active outsourced job relationships, 80 had been severed. On the other hand, among non-outsourced job positions, this proportion

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dropped to just over 40 terminations per 100 relationships. With regard to the average length of employment, while direct labor contracts lasted about 5 years and 10 months, outsourced contracts reached 2 years and 10 months. The substantiality of trade union political organization is correlated to this situation of employment instability. According to the Brazilian Institute of Geography and Statistics—IBGE (2017), it was possible to verify in 2015 that in the civil construction and trade sectors, typically outsourced activities, unionization rates were 9.3% and 13.3%, respectively. On the other hand, in the agricultural and manufacturing sectors, with lower rates of outsourced workers, the rates were, respectively, 28.7% and 23.3%. The general average of unionization in Brazil was 19.5% (IBGE, 2017). The persecution of job stability is a decisive political measure to limit the corporatist power of worker representation, both in establishing agreements and negotiations and starting strikes. In line with the intense transformations started with the 2017 legislations, in addition to unrestricted outsourcing, the Michel Temer government was able to approve Law No. 13,467/2017 in National Congress, which regulated the intermittent employment relationship. In 2019, the deconstruction of stability in labor relations gained a paradigmatic institutional form with Provisional Measure (MP) 905/2019, which established fixed-term employment contracts for young people (18–29  years old). In this modality, called the Green and Yellow Employment Contract, the employer became exempt from the contribution to the General Social Security System, the deposit of the Severance Pay Indemnity Fund (literally, the Length-of-Service Guaranteed Fund—FGTS) was reduced from 8% to 2%, and the fine for dismissal without just cause decreased from 40% to 20% of the balance deposited in the worker’s FGTS account. In addition to suppressing these public obligations, employers became exempt from compensating workers in the event of early termination of their contract (DIEESE, 2020). The said MP 905/19 was revoked in 2021 but several of its foundations were reintroduced in other federal government initiatives, such as Provisional Measure No. 1,045, which established the Emergency Employment and Income Maintenance Program. The dissolution of job stability, a central aspect of post-2016 transformations, has a direct link with the conservative policy of economic adjustment that, in 1966, implemented the FGTS against the will of workers (Camargos, 2009).6 Currently, the deterioration of stability appears in a multiplicity of types of employment relationships, such as self-employment, intermittent and temporary contracts, and the so-called “pejotização”—defined by the hiring of a worker that has constituted themselves as a Legal Entity and, who, as a company, begins to provide services without the coverage guaranteed to individual workers. In all these cases where job stability has been weakened, the corporatist representation of unions has lost the ability to be effective.

 In the same vein, Law 4,302/1998 aimed to amend the provisions of Law No. 6,019 of 1974, extending the temporary employment contract in companies. 6

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The legal profusion of employment relationships increasingly less protected by unions directly affects the consistency of public norms that recognize workers as having rights. The difficulties of inspection and compliance with labor legislation and the fiscal and social security obligations of contracts gave rise to situations in which there is little distinction between formal and non-formalized work. Politically, what is evident in all these situations is the blatant displacement of hiring parameters into the private sphere of production, guaranteeing owners legal protections that promote the disarticulation of labor struggles. As pointed out by Castel’s (2003) classic study, the achievement of job stability historically precedes most other labor rights. Not by chance, the successful attack on this principle has great implications for the structure of labor rights and is historically associated with the power of employer command and arbitrariness. A few offshoots of labor instability are low wages, longer working hours, greater insecurity in the workplace, work impoverishment, and, most importantly, its association with lower employment costs for companies and the political fragility of unions. In all the most precarious forms of purchase and sale of labor—such as outsourcing, intermittent work, “pejotização,” and temporary work—the weakening of the stability in employment that was made pari passu to the deconstruction of the corporatist legal instruments present in the legislation is common. According to the Annual List of Social Information (RAIS/IBGE), in 2018, the modality of intermittent contracts corresponded to 9% of the balance of formal jobs. In 2019, this number jumped to approximately 13%, with an average income of R$637.00 (~US$124), reaching the equivalent of roughly 64% of the official minimum wage (DIEESE, 2020). In 2020, during the COVID-19 pandemic, intermittent employment contracts accounted for about 50% of the growth in the number of jobs in the year (Caged, 2020). In a report released in 2021, the National Confederation of Industry (CNI) assessed that the intermittent employment contract was taking root in the Brazilian industry (CNI, 2021).7 Alongside the commitment to stability, the approval of the statute prioritizing “negotiation over legislation” makes up another important movement to deepen the asymmetry of power between employers and employees, directly affecting the political conditions of union representation. The proposal initially introduced through Supplementary Bill (PLC) 38/2017, defined that collective bargaining would prevail over employees’ contracts even when the normative instruments resulting from it—the Collective Agreements and Conventions—established inferior conditions to those required by the CLT. At the time, the rapporteur on the matter in the Chamber of Deputies made use of a sensitive and controversial issue in the history of Brazilian trade unionism that concerns the unions’ autonomy and freedom before the State (Santos, 2015). The statement consisted in pointing out that the new measure enriched the self-compositive way of conflict resolution,

 By consulting 523 companies in the industry, the report recorded that among the companies that used precarious types of contracts, 85% said they intended to hire intermittent workers the following year. 7

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removing state-corporatist paternalism from the mediation of conflicts between capital and labor. The prevalence of “negotiation over legislation” was combined with a series of measures that stimulated individual negotiations by companies. At first, the Reform proposal indicated 15 items that could be the object of individual negotiation, clearly pointing toward a weakening of collective bargaining and not the strengthening or expansion of the political autonomy of unions vis-à-vis employers (DIEESE, 2017). Among the labor conditions that have since become negotiable—without the necessary presence of unions and which may fall short of what is established by law—there are agreements regarding the length of the working day, issues related to safety, the hour bank, the representation of workers in the workplace, conditions for intermittent and outsourced work, in addition to the classification of unsafe working and the extension of working hours in these places without prior permission from the Ministry of Labor (DIEESE, 2017).8 As DIEESE’s technical note assesses, in practice, the new statute of negotiation “completely inverts the hierarchy of legal instruments thus far, in effect within the legal framework of Brazil’s system of labor relations, in which the CLT and other labor laws prevailed over agreements and conventions” (DIEESE, 2017, p. 17), functioning both as a baseline for rights and a beacon for the power of union action. Once again, as in the case of the vulnerability created for job stability, the new negotiation standard consisted in bringing the employment contract into the internal domain of companies. Moving from the “public to the private,” the nature of the new legal apparatus for hiring was guided by the containment of union presence and the participation of the State in several key aspects of the labor relationship. In this sense, allowing negotiation to override labor legislation was a decisive political moment to broaden the asymmetry of power, and, consequently, the uncertainty of individual and collective labor rights. The relativization of the institutionalized floor of rights as a parameter and starting point for collective bargaining imposes unprecedented difficulties for the vast majority of labor categories to maintain the benefits negotiated. As pointed out by labor sociology studies, the effectiveness of union representation and negotiation depends on a combination of factors such as, for example, the tradition of union organization, the sector of economic activity in which the represented are inserted, regional reality, and political conjuncture (Camargos, 2009; Rodrigues, 1974). According to DIEESE (2021), collective bargaining tables have become clearly defensive since 2017. In 2020, 89% of the strikes initiated contained defensive agendas—with 56% of total mobilizations referring to non-compliance with rights,

 Still within the scope of Supplementary Bill (PLC) 38/2017, in companies with more than 200 employees, the mandatory presence of the union for the termination of contracts and the creation of Representative Committees at the workplace was simply revoked. In 2022, the STF partially revoked this aspect of the Labor Reform, recognizing that union intervention prior to the mass dismissal of workers is essential. However, this does not mean that these dismissals must undergo union authorization or even a final agreement. It is merely a requirement to begin negotiations with the employer. 8

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such as late wage payments and issues related to food and, another 48%, with the upkeep of current employment conditions (DIEESE, 2021). Considering the complexity of the socioeconomic variables and constraints that influence this condition, conclusions point out that the institutional transformation of recent years has been consistently changing the content and dynamics of collective agreements and conventions entered into by the unions. In addition to weakening the stability of the employment relationship and opening up so that the negotiation of working conditions falls short of the legislated right, the constraint on the union contribution constitutes the third important moment of redefinition of the corporatist institutional structure. Once again, an instrument that gave unions better conditions for their political practice of representing workers was withdrawn. With Law 13,476/2017, the annual equivalent to one day of salary, up until then paid by workers to fund the activities of the union of their category, started to be paid only by employees who expressly declared their intention to contribute.9 With the change, two legal interpretations began to dispute the meaning of the new legislation: one that understood that the authorization would have to be individual, exclusive to each worker; and another that attributed to the unions the prerogative of establishing the authorization of the collection through a general assembly. In this case, the question arose as to whether the discount could be extended to the entire category represented, or only to those affiliated with the entity. In the midst of this conflict, in 2019, the Jair Bolsonaro government sent Provisional Measure No. 873/2019 to National Congress, which made it increasingly difficult for unions to access these funds. The MP prohibited the union contribution payment as a payroll deduction and established that it could only occur via bank slip. In June 2019, after the MP expired, the Federal Supreme Court reestablished the employer’s interest in the dispute by deciding that union assemblies do not have the sovereign right to approve the automatic collection of the union contribution (Supreme Federal Court, 2018). As assessed by DIEESE, the cutting of these funds not only started to undermine the existence of union representation but created a situation unparalleled in the world: “a system in which workers have access to the rights produced and won by the unions, but where their contribution to the entity is optional” (DIEESE, 2018, s/p). As already pointed out, the forceful condition of the union contribution has always raised enormous controversy, whose center was its (in)compatibility with the notion of associative freedom and union autonomy. In the 1970s, the thesis that pointed to the political unfoundedness of the compulsory payment understood that the corporatist intervention of the State was arbitrary, as it was a paternal action, aimed at controlling the unions, linking them to the Ministry of Labor. Nowadays, the argument that appears in the STF clauses is to affirm that making payment compulsory goes against the freedom of individuals—whether they are workers or  The union contribution or tax was instituted in the CLT in 1943. In 2018, after judging the constitutionality of the 2017 Labor Reform, the STF declared the legality of the extinction of its obligatory payment. 9

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employers. While the former would lose the possibility of choosing “whether or not to join a union and whether or not to contribute to this representation,” the former would be left with the burden of not having the option “of not collecting this contribution.” As a consequence, this “system [would] be good for trade unionists, but not […] for workers” (Supreme Court, 2018, s.p.). It is interesting to note that if in the 1970s the tormentor of the freedom and autonomy of workers was the corporatism of the intervening State, in contemporary liberal conservatism the executioner is the union, placing itself against employers and individuals. The trade union contribution tax goes against freedom because it does not result from spontaneous action, without legal coercion. In both cases, the discussion over the union tax does not bring a reflection of whether or not it would contribute to a greater balance of power between employees and owners. In other words, there are no considerations on the classic thesis of the employee as the weaker party in a labor relationship, which legitimizes the rights contained in several Western labor laws (Delgado, 2006; Camargos, 2009).10 According to DIEESE (2018), the end of the obligation is estimated to mean an average loss of 35% of the funds mobilized by unions. Between federations and confederations of the union structure, this loss could reach 100%. On the same technical note, DIEESE points out that, between 2017 and 2018, union collection plummeted by 90%, with an estimated 46 million unionized workers represented by weakened trade associations (DIEESE, 2018). Alongside the relativization of job stability, the legal weakening of negotiation conditions and the financial deconstruction of unions, the fourth important moment of the aforementioned changes was the constraint of the performance of the public labor agencies in supervising contractual relations. In this regard, a rearrangement that has already been showing substantial impacts on workers concerns labor disputes, with the limitation of free access to the Labor Court. Specifically, this new understanding established that the losing party would have to bear the costs of the lawsuit. If the judge deemed that there was bad faith in the lawsuit, there was a provision to fine up to 10% of the case’s total, in addition to the payment of compensation to the opposing party. If the inability of one of the parties to bear the costs was proven, the obligation was suspended for up to 2 years from the date of conviction. Seventy-one  years after the creation of the Labor Court, in 2017, Law 13,476/2017 consolidated an understanding of modernity contrary to the classic political perspective that formed the perception of the judiciary in the labor culture. In 2021, after being in effect for 4 years, the Supreme Court annulled these provisions, but their analysis contributes to understanding the general political orientation of the transformations that have been underway. Once incorporated into the 1946 Constitution, the Labor Court became part of the Brazilian labor system, along with the CLT and Social Security. Since then, the field of criticism formed against this public power of arbitration of labor conflicts  It is important to document that in the CLT formation debate, in the distant 1930s, the union tax was supported by employers’ segments in exchange for the guarantee that unions would not be legally allowed to build their representation within companies (Santos, 2015). 10

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became broad and diverse (Santos, 2015). As already mentioned, the thesis that the Labor Court essentially exerts a “guardianship of the State” over workers is central to the Sociology of Work. As a “substitute body” of collective free negotiation, its existence would imply the “numbing of class consciousness,” and its desire to promote harmony in the conflicts between capital and labor would jeopardize “the capacity for self-organization and self-representation of workers” (Vianna, 2003:18 as cited in Camargos, 2009: p. 23). As seen in the previous section, this perspective makes up a broader field of criticism of the Vargas Era itself. The rejection of the Labor Court by part of the analysts comes from the same theoretical root as the opposition to the union contribution tax, pointing out that this legal body went directly against the autonomy and political freedom of unions (Santos, 2015). However, the current argument for limiting free access to the Labor Court is based on a purely economic reason, not considered in classical criticism. More precisely, the thesis consists of pointing out that the aforementioned judicial body does not make a profit for the public administration and its use should therefore be discouraged (Chamber of Deputies, 2021). The moral foundation is that the introduction of provisions that result in a financial burden to the worker would be a way to make them act with greater responsibility before taking their claim to court. The analysis of the impacts of these hurdles to access the Labor Court on workers’ lives should have the repeated decline in the quality of job posts as a backdrop in the current context of high unemployment. Considering the atmosphere of economic and political crisis, it is plausible to suppose that labor conflicts are increasing, making the rise of cases in the Labor Court an expected reality. Despite this likelihood, what is observed is that, as a result of the legal constraints mentioned, the number of lawsuits filed in 2018 fell by 34% compared to 2017—the year the Reform was introduced. If we take the São Paulo Labor Court, for example, in the same period, lawsuits centered around moral harassment fell from 42.4 thousand requests, in 2017, to 16.9 thousand, in 2018—moving from the nineteenth place as the most common claims to the thirty-first position. Lawsuits directly linked to occupational health issues, such as Workplace Accidents, Occupational Diseases, and Workers’ Compensation Benefits, decreased by 57% in the same period, from 24,468 to 10,468 (TRT SP, 2019). These data eloquently show that the constraint of access to the Labor Court has an inhibitory effect on the guarantee of public labor rights, expanding the employers’ power to make it difficult to denounce or not the pathologies resulting from the production process. As we have seen, these transformations undermine the constitutional solution of labor conflicts that, historically, has been placed as a central aspect in the construction of democratic labor relations in the Brazilian State. Thus, it is possible to note that the changes undertaken in laws that had a corporatist principle meant the dissolution of basic precepts that conferred power to workers and, although with limits, served as a containment to the expansion of employers’ power. The controversial issue, therefore, consists in thinking about the terms by which corporatism, even with all its contradictions, has a democratic relevance, insofar as it preserved

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important models for balancing the asymmetric power that characterizes the relationship between employers and employees in the capitalist order. From this perspective, the so-called Labor Reforms can be understood as an accelerated process of de-democratization. Or, as we have been developing, a complex deconstruction—in a public and collective sense—of the right of workers. In its place, parameters that broaden the scope of the employer’s domain are broadened, based on the individual hiring of work, the weakening of union representation and the limitation of access to the Labor Court. From this analysis, it is possible to identify that, historically, corporatism possessed a democratic public sense, albeit limited. In its absence or relativization, it is possible to witness the categorical imposition of the “rights” of owners—a genuine process of oligarchization of power that profoundly transforms the democratic nature of the Brazilian State.

5 Final Considerations As we have sought to elucidate in this chapter, labor rights not only constituted the axis of democratization of the Welfare State in the twentieth century, but these, to a large extent, were based on openly corporatist arrangements. In these experiences, the democratic moment of corporatism is based on reducing the inequality of power in the conflict between capital and labor. No less important, more than a virtue of the corporatist institutional apparatus, its democratic validity was unappealably conditioned to the political labor capacity to enforce the promises of the law. The consideration that the deconstruction of the corporatist standard of labor and union legislation is a constitutive part of the current regression of labor rights, undoubtedly causes deep concerns. As we discussed in the third section of this chapter, for many interpreters corporatism was understood in opposition to the democratization of labor relations in Brazil. However, the finding that recent labor reforms are anti-corporatist, and that they operate by degrading working conditions, depressing formal rights, and weakening the political power of trade union associations, is part of the lessons learned from the recent conjuncture. The deconstruction of the collective norms of hiring; the weakening of the political and economic power of union organizations and the restriction of access to the Labor Court were analyzed here as central to the dilution of the public and collective parameters for hiring. The rejection of the labor reforms promoted by the ultra-conservative governments of Michel Temer (2016–2018) and Jair Bolsonaro (2019–2022), is almost unanimous among labor analysts, trade union associations, and workers in their daily lives. As we have indicated, this process is not to be confused with a reduction of the State’s presence in labor relations but, rather, constitutes an acute phenomenon of crisis of the corporatist constitutional form, which, for better or worse, solved labor conflicts in the country for the last 90 years. To use Paul Pierson’s (2001) classification, such changes come closer to a radical recommodification of rights, and less of a movement for cost containment, recalibration, or adaptation of political structures. This recommodification does not entail a reduction of the State but,

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rather, the construction of public norms that expand the space of control and reproduction of private power. Certainly, the scope and voracity of these transformations cannot be explained solely by the arrival in power of two liberal governments beginning in 2016. The behavior of the National Congress—Chamber of Deputies and Senate—and, in many cases, the legitimizing action of the Federal Supreme Court and the emphatic media support for the removal of rights established throughout Brazilian republican history are decisive parts of this process. Through the convergent action of these powers, the coup d ‘état operated in 2016 triggered, in addition to the illegal removal of President Dilma Rousseff (2010–2016) from power, a “political movement” based on a new form of power pact. Its center of gravity, less than a political platform or program, is self-identified with an incessant movement of antisocial reforms—demonstrably refractory to popular support. They are a movement of strength rather than consensus. Going to the limits of our reflection, it is necessary to highlight the lack of detailing on the democratic insufficiencies of traditional corporatist labor regulation. This is, without a doubt, an important absence because our reflections should not be taken as an effort to resume a kind of idyllic past of corporatism. The historical experience of social strata living outside the formal labor legislation, especially Black women and men, which, even when incorporated into formality are undermined, is part of the central issues in which the corporatist tradition deserves to be challenged. The segmentation of rights that results from traditional legislation and its low integration with the design of other public policies would also require a critical approach, particularly with regard to the commodification of health through collective bargaining (Teodoro & Csapo, 2021). These agendas are undoubtedly central to the problem of social cohesion and to the understanding of conflicts and the course of social struggles for rights in which the democratic sense of protective labor legislation will have to exist. Another important dimension is to reflect on the applicability of the corporatist structure in a production system outside the standards of Fordist capitalist industrialization. Under the current conditions of global capitalism in a form that financializes and exploits labor through digital applications and platforms, the corporatist experiences of the past may have very little or nothing to contribute. The disturbing and revealing fact is that, nevertheless, the renewed forms of capital exploitation have turned precisely against corporatist legal restraint. Either way, the balance of these challenges seems to point out that the central political issue remains the historical recomposition of public control over the private reproduction of decisions that sustain the political relations of the economic exploitation of capitalism. Thus considered, the historical surpassing of corporatism will only prove itself feasible in the face of arrangements that are decidedly effective to the struggles of workers against the asymmetries of power expanded by the new movements of capital. In these terms, the possible recomposition and balance of Brazilian democracy remains linked to the basic constitutional form to which labor conflicts are equated. Whatever its form, the public sense of labor rights will remain deeply current.

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Chapter 4

The Dismantling of Employment Policies in Brazil: Employability without Rights Arnaldo Provasi Lanzara

1 Introduction This chapter discusses the current dismantling of public policies related to employment in Brazil. The hypothesis that guides this study is based on the assumption that the precarious institutionalization of the public employment system in the country, particularly for professional training and unemployment insurance programs, their failure to adapt to a context of changes in the labor market, and the recent dismantling of labor legislation, are factors that favor the dismantling of these policies. This hypothesis will be tested by demonstrating how the coalitions of conservative forces that governed Brazil in the period between 2016 and 2022 began to exploit the ambiguities of employment policies to distort their forms and functions. According to the literature on the dismantling of employment policies, in an environment of more flexible labor regulations, some employment policy instruments, known as “activation instruments,” tend to be appropriated by these coalitions to reduce labor rights and promote compensatory protection initiatives (Bonoli, 2010; Bonoli & Natali, 2012; Green-Pedersen et al., 2012; Jensen et al., 2017; Dinan, 2018). It is worth noting that the governmental vacuum of public employment policies in Brazil and the recent dismantling of labor legislation produced by a coalition of forces contrary to the interests of workers, in a context of increasing deterioration of the labor market, have been disseminating several “training” initiatives that aim to promote the growth of informal jobs, especially in the new digital employment platforms. Moreover, in line with the “New Fiscal Regime” implemented in 2016, which froze public spending for 20 years, Jair Bolsonaro’s (2019–2022) authoritarian and A. P. Lanzara (*) Federal Fluminense University, Volta Redonda, Brazil e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Fleury (ed.), Social Policy Dismantling and De-democratization in Brazil, Societies and Political Orders in Transition, https://doi.org/10.1007/978-3-031-35110-5_4

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ultraliberal government sought to extinguish a series of labor benefits to create new social programs with a marked residual characteristic. This study highlights how such measures have been straining the Brazilian social protection system, contributing to its systemic disruption and eventual replacement by a “system of employability without rights.” In addition to this brief introduction, this chapter is arranged into five sections. The second section reexamines a few claims made in the literature regarding public policy dismantling, highlighting how dismantling strategies acquire new operational forms in contexts dominated by a constitutionalized fiscal austerity. The third section discusses policy dismantling for the labor market, emphasizing the traditional ambiguity of the instruments that characterize these policies as one of the main vectors for the introduction of restrictive measures for labor-related social benefits. The fourth section focuses on the most recent case of dismantling labor market policies in Brazil, highlighting the instruments used by the Bolsonaro government to dismantle labor benefits and at the same time create a new regime of employability without rights in the country. Lastly, the fifth section concludes the chapter by revisiting some studies on the phenomenon of the naturalization of precarious employability (Machado da Silva, 2002), discussing its implications in light of the current moment of destruction of public institutions for labor regulation in Brazil.

2 Dismantling of Social Policies in a Context of Constitutionalized Fiscal Austerity The works of Paul Pierson (1996, 2011) on the dismantling of social policies mark an optimistic turn in the perspective of the future of the Welfare State in face of liberalization processes. Roughly speaking, Pierson’s central thesis is that the previous expansion of social policies favors its continuity over time. In this respect, the stabilization of voters’ preferences regarding the maintenance of certain redistributive benefits would be an important piece of evidence of the “institutional inertia” of social protection systems, immediately removing any possibility of more radical dismantling of such policies (Pierson, 2011). However, the abundance of literature written on the retraction of the Welfare State in recent decades has shown that the various factors underlying policy dismantling are quite complex. This literature has identified a variety of nuanced mechanisms of change in social policies, usually activated through surreptitious instruments and discrete actions (Palier, 2007; Streeck & Thelen, 2005; Béland & Schlager, 2019). Heuristically, policy dismantling strategies can be classified as stemming from two interrelated dimensions: (1) the deliberate decision of governments to dismantle electorally sensitive policies; (2) the visibility and costs of dismantling actions (Bauer & Knill, 2014). It is important to emphasize the distinctions of degree that characterize the dismantling processes of welfare policies. Paul Pierson

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(1996) highlights two different types of dismantling in the context of “permanent austerity”: the “programmatic dismantling,” usually mobilized to reduce social spending in the short term; and the “systemic dismantling” that, as the name suggests, conspires against the very foundation of social protection systems (Pierson, 1996, p. 157). Nevertheless, it is difficult to discern what separates programmatic dismantling from systemic dismantling. Would programmatic dismantling not be the beginning of a more structured process of systemic dismantling? Do cuts in social policies only represent responses to an unfavorable and transient macroeconomic environment, suggesting specific adjustments and recalibration in policies, or a broad deconstruction process? It is a fact that cuts and social program reforms have generated a context of widespread and generalized growth of inequalities, the degradation of solidarity relations, and increased insecurity (Clayton & Pontusson, 1998; Korpi & Palme, 2003). Therefore, to claim that social welfare policies endure, despite current constraints that limit their expansion, does not answer the questions and problems related to the recent process of corrosion at the bases of support of welfare systems around the world. Moreover, the idea currently in vogue that the adoption of fixed austerity rules can improve the performance of monetary authorities, mitigating fiscal pressures on budgets, has worked as a powerful device to restrict the ability of governments to produce policies. Nowadays, the government’s effort to balance public finances does not require the adoption of simple adjustments, but rather the creation of “new fiscal regimes” (Haffert & Mehrtens, 2014, p. 27). Enthusiasts of these measures advocate that austerity policies should be directly inscribed in national constitutions to produce lasting fiscal impacts (Alesina et al., 2015). A certain nostalgia for the restoration of the gold standard seems to justify, in several countries, the construction of constitutionalized fiscal austerity rules to discipline the distributive conflict and reverse budgetary priorities, meeting the expectations of investors and shareholders (Schneiderman, 2018; Slobodian, 2018). As a result of this prescription, governments are increasingly constricted by pressures from fiscal consolidation. And without the option of increasing their revenues to finance investment policies and redistributive social spending, governments begin to promote a spiral of cuts in social programs and benefits. Moderating demands for wage claims, increases in benefits, and new rights is no longer a viable alternative to ensure a safe environment for investors. Maintaining this environment depends on the creation of depoliticized rules that “automate” some of the functions of government (Weaver, 1986, p. 371). Blind trust in austerity rules has become a means for governments to elude their commitments to electorally sensitive redistributive policies. Constitutionalized fiscal austerity rules lead welfare policies toward their dismantling and offer ruling governments a solid incentive structure to adopt unpopular measures without incurring significant political costs. According to Weaver (1986, p. 387), “automatic government” is the most recent manifestation of politicians’ and policymakers ‘desire to blame avoidance by

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adopting unpopular measures, delegating important government decisions to non-­ elective institutions. Thus, independent authorities, such as central banks, constitutional courts, and regulatory agencies take on the role of “guardians of the budget” (1986, p. 388) regardless of voters’ preferences, while social programs are cut and forced to compete for funds that are increasingly scarce and limited by budget constraints. By changing from a politicized system (based on discretionary government action) to an automatic and depoliticized system (based on austerity rules), governments monitor the demands of the population according to fixed guidelines, in addition to “externalizing” the responsibility by imposing fiscal discipline (Burnham, 2001, p.  134). In this sense, public policies become more “supervised” and are evaluated exclusively for their budgetary impacts (Haffert & Mehrtens, 2014). The automaticity of government action becomes a powerful excuse to contain democratic expectations, refuse demands, and delegate responsibilities because if the hands of governments are tied, they can do nothing. In short, delegating responsibilities to the “automatic government” constitutes a central strategy for the dismantling of social policies. And if the growth of government automaticity is proportional to the retraction of its discretion to conduct redistributive policies, the same cannot be said in relation to the degrees of freedom conferred to private welfare services; increasingly customized and subject to mechanisms of governance and self-regulation that border on improvisation and fraud. The next section will discuss the specific mechanisms that drive changes in employment policies.

3 Strategies for the Dismantling of Employment Policies The thesis of institutional resilience of social policies to dismantling processes seems less convincing when the focus of analyses shifts to employment policies. In recent decades, the increase in unemployment and the decline in protected employment, with the expansion of underemployment and new modalities of precarious employment linked to the advance of the digital economy, have strongly affected the organizational bases of national Welfare States (Clayton & Pontusson, 1998). As a result, labor market policies have become less generous and attractive. The dismantling of labor benefits can be both a deliberate action and a calculated inaction strategy (Hertel-Fernandez, 2013). In contexts of strong fiscal pressures, the monetary value of labor benefits can erode even in the absence of reforms; either when they are not readjusted by current inflationary levels or when they are de-­ indexed from the reference amounts set by the minimum wage (Green-Pedersen et al., 2012). Such changes have generated a spiral of “invisible cuts,” since changing the basis of calculation to readjust labor benefits is a very opaque retraction device for voters (Green-Pedersen et al., 2012; Jensen et al., 2017). Politicians can find it easy to cut these benefits, especially when their efforts are combined with an “expansionary agenda” of implementing low-cost, targeted

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compensatory programs, having a strong symbolic content, such as means-tested programs. By expanding these programs, governments interested in dismantling labor benefits can convey the image that they are “committed” to the eradication of poverty, becoming less subject to electoral strain (Jensen et al., 2014, p. 28). The different forms of framing welfare policies from old notions, such as “deserving” or “undeserving” public aid, have become a powerful discursive device to convince voters that restrictive reforms in employment policies are necessary and have an inclusive aim (Schmidt, 2012; Slothuus, 2007; Marx & Schumacher, 2016). In this respect, public attitudes regarding the dismantling of policies can be strongly influenced by judgments about the “deservingness” of the beneficiaries; placing on opposite sides the beneficiaries of employment policies—framed as “undeserving” of the aid to which they are entitled—and the beneficiaries of anti-poverty policies framed as the “deserving poor” (Slothuus, 2007, p. 327). From the perspective of social rights, such judgments represent a division of citizenship: one part of the population receives benefits that the other part considers “privileges.” It should be noted that this way of framing the beneficiaries of social policies is particularly relevant for dismantling strategies in contexts of fiscal austerity and scarcity of resources, leading bureaucracies from different social areas to compete so that their policies have the due “deservingness” within the budget. Indeed, employment policies have become the preferred targets of dismantling strategies. Green-Pedersen (2002) states that cuts in some components of labor market policies are more easily justified by governments; that they can claim, for example, that unemployment insurance programs are unjustifiable “privileges” in the face of the phenomenon of the growth of informality and poverty (Green-­ Pedersen, 2002). In heterogeneous and dual labor markets, the options to reform different aspects of labor regulation, such as active training policies and passive unemployment insurance policies, involve the mobilization of different groups of workers; and the policies that affect these groups do not always enjoy broad electoral support (Gallego & Marx, 2017). Similarly, the formation of a solid coalition to defend employment policies is dependent on the different forms of integration of workers into formal or informal labor relations (Rueda, 2006). Furthermore, the traditional division that defines the boundary of this relationship in several countries, including countries that have universalized the wage norm, is becoming increasingly fluid. Before discussing the ambiguity that characterizes current employment policies, it is necessary to define what the scope of these policies means compared to more mitigated versions, known as workfare policies. Firstly, the appreciation of the political, sociological, and economic implications of public employment programs goes beyond the narrow definitions of “competence” and “capacity,” as understood by the meritocratic-liberal repertoire. Secondly, the experiences of more comprehensive policies for the labor market cannot be dissociated from certain political conditions that allowed for the advent of more balanced relations between the power of capital and labor: “institutionalized conditions of parity of claims in the distributive conflict” (Korpi, 1983, p. 37).

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Such conditions are deeply related to the management practices of the social conflicts inaugurated by social-democratic governments already in the interwar period, and that were favored in the post-Second World War era with the advent of several wage co-determination experiments, highlighting the German model of industrial relations, which gave workers a permanent seat on the boards of directors of companies and parity in decisions regarding salaries and the hiring and dismissal of personnel (Streeck, 2007; Thelen, 2004). During the 1950s and 1960s, several European countries replicated these experiments through a virtuous combination of passive and active employment protection measures (Swenson, 2012; Bonoli, 2010). Particularly in the German model, employers were asked (or persuaded) to share with the State and trade unions the task of training workers through ambitious vocational systems (Thelen, 2004). In short, the labor markets structured by these policies were not “simple markets,” comprising a dense network of institutions whose main purpose was to connect education, socio-professional skills, and social protection. However, it is quite common to argue, as an objection, that the conditions that led to the advent of these successful experiments ceased to exist due to the technological changes that have affected employment relations in recent decades. But the fact remains that these experiments were introduced in a context very similar to the current one; a context of intense productive changes, occupational transitions, and shortages of qualified labor (Bonoli, 2010). Therefore, the problem does not concern a fatal employment crisis generated by the advent of new technologies and a lack of responses, but rather a growing process of deregulation of labor. The so-called “workfare policies”1 are the most complete expression of this process (Dean, 2007). It is through these policies that the right to work, in several societies, has been gradually exchanged for “employability measures” aimed exclusively at forcing the unemployed to engage in a deregulated and unprotected labor market (Lanzara, 2016, p. 67). In several countries, various activation policies have been created to reduce unemployment, including the notorious workfare programs. However, these new initiatives to compensate for unemployment are almost always accompanied by substantive reductions in labor protection (Thelen & Busemeyer, 2012). Furthermore, activation policies cover a diversity of measures and instruments that depart from their objectives (Bonoli, 2010; Dinan, 2018). The properties that make up the instruments of activation policies are quite ambiguous and can influence labor markets distinctly, whether from the perspective of social protection, investment in human capital, or the mere recommodification of labor (Bonoli, 2010). Some active policies can lead to an increase in employability rates in the short term without producing any improvements in labor markets; they can even induce cuts in some programs,

 Workfare policies were intensely pursued by some countries with a strong liberal tradition, such as the United States and Great Britain, which deregulated their labor markets, increasing incentives for temporary and precarious employment by imposing penalties and sanctions on workers (Dean, 2007). 1

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such as unemployment insurance, completely separating employment from social protection (Bengtsson et al., 2017). Governments engaged in pursuing strategies to make labor relations more flexible are particularly tempted to exploit the ambiguities that characterize “activation instruments” (Bonoli, 2010). Such instruments enable attractive solutions for governments interested in deregulating labor relations, thus guaranteeing minimum protection, since they represent low-cost political alternatives with strong electoral appeal—especially for the most vulnerable fringes of the labor market deprived of formal labor relations (Bonoli & Natali, 2012; Dinan, 2018). In short, the proliferation of activation instruments aimed exclusively at promoting temporary employability and entrepreneurship, is a way to relieve the State from its obligation to generate high-skilled and protected jobs. However, for politicians engaged in the dismantling of public employment policies, the use of these instruments can be a useful smoke screen to hide certain objectives, such as the extensive commodification of labor relations and the creation of mitigated protection strategies, as will be demonstrated by the Brazilian case to follow.

4 The Dismantling of Public Employment Policies in Brazil Discussing the current dismantling process of employment policies in Brazil is a major challenge. After all, why discuss the dismantling of policies that have never been fully implemented, policies of precarious institutionalization? What is the point of attributing political costs to the dismantling of policies that have little scope and coverage? In order to provide some answers to these questions, we must first of all understand the meaning of these policies in a country like Brazil. Structurally speaking, what characterizes labor relations in the country is not solely the mobility of workers between “formal” and “informal” positions, which is quite intense. The continuous flow of workers between these positions suggests that the so-called formalization of work in Brazil makes little difference between those employed or underemployed, which ends up obscuring the fragility of labor ties produced by the economy (Cardoso, 2013). However, despite these factors, the regulation of labor in Brazil was an important vector of integration to citizens’ rights; at least for the restricted universe of those included in formal labor relationships. It is never too much to remember that labor legislation and formal salaries, although always contested and incipient, conferred a minimum of material and ontological security, building a threshold of social sensitivity and a new sociability from which Brazilian workers referenced their repertoire of rights and collective action (Cardoso, 2010; Lanzara, 2018). The 1988 Federal Constitution democratized the legacy of laborism implemented by Getúlio Vargas in the 1930s and 1940s and reconfigured the social protection system by significantly expanding social security and assistance coverage, with the consequent increase in transfers, especially those linked to the minimum wage. It is

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worth remembering that a large part of Brazilian wage earners are low-income workers who receive up to two minimum wages; and the minimum wage in Brazil is an important index of protections, constituting a reference wage floor for several contributory social benefits, such as retirement and pensions, unemployment insurance, family allowance, special wage bonus, closed season insurance 2; and for non-­ contributors, such as the Continuous Cash Benefits Program (Benefício de Prestação Continuada—BPC). 3 Also significant were the measures provided for in the constitutional text that directly affected work, such as the bases for the constitution of the Worker Support Fund (Fundo de Amparo ao Trabalhador—FAT), responsible for financing public employment policies (Cardoso Jr. et al., 2006; Silva, 2018). It is worth noting that the main programs set up with FAT funding were proposed based on the construction of a broad public employment system in the country (Moretto et  al., 2003; Cardoso Jr. et al., 2006; de Oliveira, 2007; Silva, 2018). The many programs established at the core of this system, such as unemployment insurance, labor intermediation, and professional training, should act toward the structuring of the labor market, fulfilling an important auxiliary role in the effort to maintain and expand formal salaries (Cardoso Jr. et al., 2006). In addition, the system should ensure broad participation and social control in the creation and implementation of training programs—fundamentally by consolidating and empowering state and municipal employment/labor committees and the Worker Support Fund Deliberative Council (Conselho Deliberativo do Fundo de Amparo ao Trabalhador—Codefat) (de Oliveira, 2007). Despite constitutional provisions, labor market policies produced few real impacts, developing from scarce institutionalization and intersectoral coordination, in particular with education and income policies. Moreover, they have always been characterized by high bureaucratic fragmentation and low reach in terms of coverage, especially in the case of unemployment insurance. It is also worth highlighting the discontinuity of initiatives, particularly in the field of professional training, and their instrumentalization for various purposes. During the 1990s, it became common practice to transfer funding for training programs to municipalities and private entities with little or no implementing capacity. In short, there were no technical criteria defined by the government for the transfer of funding or efficient instruments for monitoring and controlling this policy (Lanzara, 2016). Although characterized by fragmented actions, in the period between 2007 and 2014, professional training programs registered relative advances

 The family allowance is a benefit paid to workers with gross monthly income equal to or less than the minimum wage and children up to 14 years old or disabled. The special wage bonus is a benefit paid in a single installment of up to an annual minimum wage, depending on the number of months worked in the reference year, which benefits formal workers with an average monthly income of less than two minimum wages. Closed season insurance is a form of unemployment insurance aimed at artisanal fishermen during periods when fishing is prohibited. 3  The BCP is intended for people with disabilities or older people aged 65 years and over living in poverty. 2

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in the coordination initiatives. Programs created by several government departments around the objectives of productive inclusion Brazilian government in 2011, such as the National Program for Access to Technical Education and Employment (Programa Nacional de Acesso ao Ensino Técnico e ao Emprego—Pronatec), attested to the effectiveness of intersectoral initiatives within the scope of professional training, bringing together (Costa et al., 2014). Since 2011, Brazil has also expanded its federal network of technical institutes, significantly expanding the number of graduates of these institutions (Furtado, 2020). However, the economic stagnation of recent years has led to an increase in the number of people trained and idle demonstrating that these measures must be accompanied by an increase in public investments to generate jobs (Silva, 2020). In turn, unemployment insurance was introduced in 1986 and has a few limitations, since it was not originally envisioned to deal with the high levels of informality of the Brazilian labor market (Mourão et al., 2013). The benefit offers financial aid for a period of three to 5 months in the event of loss of employment. 4 The Brazilian unemployment insurance program is one of the least generous in the world in terms of coverage levels, sums, and eligibility rules; its coverage rate is considered low by international standards, being slightly above the average rate found in African countries that have the benefit (Fig. 4.1). Strict eligibility criteria, high informality, and job turnover are factors that prevent workers from accessing the program. Compared to other countries, Brazil ranks fifth in terms of rigor of the qualification period required to receive the benefit, offering the 27th worst minimum benefit when the basis for calculation is the average wage of the population (Amorim & Bilo, 2019). It is worth mentioning that 100 90 80 70 60 50 40 30 20 10 0

94 100

45.3 46.6 12.2 5.6 7.8

52.7

60

60 64.5

73

30.1 24.1 24.3 27.9 28.5 18.8 21.8

Fig. 4.1  Unemployment insurance coverage in countries and regions—ratio between the number of insured persons and the total number of unemployed (in %). Source: created by the author based on International Labor Organization—ILO data (2017)  The following are entitled to the benefit: (1) formal workers dismissed without just cause; (2) domestic workers; (3) workers rescued in conditions analogous to slavery; and (4) artisanal fishermen during closed season. 4

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the incipient coverage and low sums of unemployment insurance in the country limit its potential to stabilize the total payroll in periods of crisis (International Labour Office, 2017). Despite the economic dynamism and public policies to increase the value of the minimum wage and formalization of employment promoted by the Lula da Silva (2003–2010) and Dilma Rousseff (2011–2016) governments, in the period between 2007 and 2012 the number of beneficiaries of unemployment insurance increased substantially. This increase occurred because the greater formalization of employment in the period was not accompanied by a reduction in the turnover rate at the workplace (Moretto, 2010). In view of this, with a larger number of jobs created the number of workers who met the minimum requirements to receive the benefit also increased, resulting in an increase in its expenditures. To overcome this situation, at the end of 2014, the Dilma Rousseff government significantly changed the rules for accessing unemployment insurance through Law No. 13,135/2015. Pressed by strong fiscal pressures, and amid a turbulent political crisis, the government created stricter conditions for accessing the program to contain the increase in its spending. The change in the unemployment insurance rules was considered very restrictive and made the former president clash with her political base, particularly with the unions, paving the way for the 2016 legal-parliamentary coup. The public employment system in Brazil has also not been adapting to the challenges that affect productive dynamics and the labor market. In this regard, there is a complete absence of strategic and coordinated actions to face the problem of occupational transitions generated by technological changes. This absence is even more dramatic considering that the adverse effects produced by the COVID-19 pandemic on educational systems, and particularly on the labor world, have made the disadvantages resulting from the advent of new technologies more prominent. The health crisis exacerbated the situation in the Brazilian labor market, increasing levels of unemployment and informality. In 2021, after reaching the alarming rate of 15.1% in March, the unemployment rate decreased to 13.7% in June. In this period, of the 87.7 million people with some type of formal or informal work, 28.3% were self-employed; and many became “entrepreneurs” out of necessity (Lameiras et al., 2021). The deterioration of the conditions of the Brazilian labor market precedes the health crisis and dates back to the liberalizing reforms introduced by the Michel Temer government (2016–2018) and deepened by the Bolsonaro administration (Pinho & Lanzara, 2022). These reforms created a new institutionality that sought to systematically make the Brazilian social protection system unfeasible by imposing constitutional limits on public spending. Constitutional Amendment No. 95 from 2016 (EC No. 95/2016), the backbone of the so-called “New Fiscal Regime,” limited public spending and directly threatened the State’s ability to produce policies, creating a spiral of deregulation, such as labor (Law No. 13,467 from 07/13/2017) and social security (Constitutional Amendment No. 103, from 11/13/2019) reforms, both undertaken following the constitutionalized adjustment. It is worth remembering that the enthusiasts of the “New Fiscal Regime” asserted that the distributive conflict in Brazil had reached an unsustainable limit, generating

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budgetary burdens, and that it would be necessary to introduce “legal coercions” in order to rein it in. And it was these coercions that created an artificial scarcity of resources to reverse expectations of inclusion of the population in social rights enshrined in the 1988 Federal Constitution (Oreiro, 2018). One of the main effects of the “New Fiscal Regime” was to generate competition between the various sectors of social policy for budgetary resources considered “scarce,” thus limiting the scope of various policies. In this sense, the “automatic government” (Weaver, 1986) introduced by the new constitutional spending ceiling became the main justification for politicians committed to fiscal austerity to attack social rights, especially labor rights, seen as “privileges.” With the 2016 coup, the Temer government carried out the labor reform (Law No. 13,467 from 07/13/2017), which prioritized negotiations over legislation; facilitated the creation of atypical contracts, such as the intermittent contract; allowed for the cutting back of hiring and dismissal costs by setting work conditions below the standards set by the Consolidation of Labor Laws (Consolidação das Leis do Trabalho—CLT); made it possible to initiate variable remuneration and salaries as non-wage payments; diluted the Labor Court’s rulemaking capacity; and weakened the unions by decentralizing collective bargaining (Krein et  al., 2021; Pinho & Lanzara, 2022). Despite the controversial results of the labor reform, the destructive onslaught on workers’ rights was intensified in the Bolsonaro government. To facilitate the dismantling of labor legislation and employment policies, the Ministry of Labor was extinguished, and its policies were fragmented and distributed among several ministries. Imbued with the argument that labor benefits burden production and create “privileges,” the government proposed, in the first year of its term, the termination of 248 public funds, including the Worker Support Fund—FAT, which as mentioned is the main source of funds for employment policies. As per the directives of Bolsonaro’s ultraliberal minister of the economy, Paulo Guedes, the discontinuation of FAT would be a fundamental step to end the “patrimonialist use” of its funds (Folha de São Paulo, 2019). However, such controversial measures did not go forward and met resistance in the National Congress, generating strong opposition from the unions. It is also worth mentioning that the Ministry of Labor and Social Security was recreated in 2021 to accommodate the interests of parliamentarians who support his government. The announcement of the ministry’s recreation generated competition between the minister of the economy and members of the new department on the destination of funds from the Worker Support Fund—FAT. These funds were always coveted by Guedes’ austerity policies and remained under the Ministry of the Economy’s Special Secretariat of Finance precisely to neutralize their possible use to foster public investment strategies and job expansion. Threatened by low approval rates due to his mediocre performance in conducting the pandemic, and in the midst of a deep economic crisis, Bolsonaro issued MP No. 1.058/2021 again placing FAT resources under the responsibility of the Ministry of Labor and Social Security (Globo, 2021).

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The Bolsonaro government also takes advantage of certain discursive strategies, ambiguous instruments, and surreptitious mechanisms to dismantle labor benefits and employment policies. Since the beginning of the health crisis, with the widespread growth of unemployment and poverty, several proposals have emerged aimed at using funds meant for labor benefits to finance emergency policies to fight poverty. An example of these proposals was Bill No. 5,343/2020, titled “Social Responsibility Program,” currently removed from the agenda, which intended to create a “minimum income” financed with funds from the extinction of various labor benefits (Fleury et al., 2021). With the justification that these benefits have a “low redistributive effectiveness,” a veiled strategy of “expansionary dismantling” is promoted (Jensen et al., 2014), in which work-related benefits, crucial to the maintenance of the income of the poorest wage earners, are dismantled to give rise to compensatory instruments to fight poverty; instruments detached from broader social assistance policies, as constituted by the Unified Social Assistance System (Sistema Único de Assistência Social—SUAS). The Bolsonaro government program for social assistance which replaced the Family Allowance Program (Programa Bolsa Família—PBF), the Brazil Aid Program (Programa Auxílio Brasil) moved in this direction. The program provided for the creation of a number of monetary benefits for poverty relief that competed for the same budget, the objectives of which were quite contradictory. To avoid “disincentives to work,” some benefits provided for in the program, such as the Auxílio Inclusão Produtiva Urbana (Urban Productive Inclusion Aid), required a few insidious tradeoffs, forcing beneficiaries to be officially registered for work. Other benefits explicitly aim to commodify the area of social assistance, such as the Auxílio Criança Cidadã (Citizen Child Aid), which intended to provide a voucher for beneficiary families to enroll their children in private daycare centers (Bartholo et al., 2021). As can be seen, while labor benefits are dismantled, compensatory policies gain importance and acquire new roles in the new residual protection arrangement proposed by the Bolsonaro government to deliberately commodify labor and assistance policies. With this new arrangement, policies for the labor market lose meaning, because employment and social protection start to be seen as conflicting objectives. The beneficiaries of the various programs are therefore left with the alternative of accepting any job, in general, precarious and without protection, or minimum and compensatory protection, which immediately leads to a job. Ultimately, what the Bolsonaro government intended by stubbornly pursuing these policies was to create a regime of employability without rights in the country. To achieve this goal, Bolsonaro overindulged in his power to issue Provisional Measures (Medidas Provisórias—MPs). 5 Proof of this was MP No. 905, of  Provisional Measures are norms with the force of law, edited by the President of the Republic in situations of relevance and urgency. It produces immediate effects, that is, it is already valid at the same time it is being processed in Congress, but it depends on the approval of the Chamber of Deputies and the Federal Senate for it to be definitively transformed into law. 5

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11/11/2019, which intended to establish a new professional status to generate jobs without labor rights. Most of these MPs were barred or modified by the National Congress, with the only exception being MP No. 936, of 04/01/2021, which was approved and later converted into Law No. 14,020 of 06/06/2021, establishing the Emergency Employment and Income Maintenance Program (Programa Emergencial de Manutenção do Emprego e da Renda—PEMER), allowing the reduction of working hours and wages, as well as the suspension of the employment contract in the context of the pandemic (Pinho & Lanzara, 2022). In addition, it instituted the Emergency Employment and Income Preservation Benefit (Benefício Emergencial de Preservação do Emprego e da Renda—BEm), in order to compensate for part of the loss of income from work that occurred during this period (Departamento Intersindical de Estatísticas e Estudos Socioeconômicos, 2021a). Despite the importance of these measures for the preservation of jobs during the health crisis, they did not prevent the loss of income resulting from the reduction of wages, especially for workers who earn just over two minimum salaries and, in the spirit of the new labor legislation, privileged individual negotiations with regard to the reduction of working hours and wages, restricting the scope of collective agreements (Pinho & Lanzara, 2022). In April 2021, the government issued a new Provisional Measure (MP No. 1045) that intended to deepen the labor reform. MP No. 1045/2021 was approved in the Chamber of Deputies, in the form of Bill No. 17/2021 (Bill No. 17/2021), being rejected by the Senate. Although vetoed by the Federal Senate, the measures provided for in Bill No. 17/2021 show how a labor market lacking regulation facilitates the introduction of new instruments and programs aimed at increasing the flexibility of work and encouraging jobs without protection. Among the most controversial measures contained in the aforementioned Bill, are as follows: (1) the restriction of access to free justice, and not only in the sphere of labor 6; (2) the introduction of professional training programs for youth and unemployed people aged above 55 years, with clear characteristics of workfare programs (Pinho & Lanzara, 2022). Regarding this last point, PL 17/2021 intended to establish two new job creation and professional training programs, namely: the Special Training and Productive Inclusion Scheme (Regime Especial de Qualificação e Inclusão Produtiva—Requip) and the First Opportunity and Reintegration into Employment Program (Programa Primeira Oportunidade e Reinserção no Emprego—Priore). Requip authorized companies to hire young people aged from 19 to 24 years, for up to 2 years, without a work record booklet and earning half the minimum wage; those enrolled in the program would be awarded a Training Incentive Stipend (Bolsa de Incentivo à Qualificação—BIQ) and a Productive Inclusion Bonus (Bônus de Inclusão Produtiva—BIP) and would not receive any compensation at the end of the employment contract. The Priore, in turn, would be aimed at young people aged 18–24 years, and also at workers aged 55 years and over who were unemployed. The

 According to the Project, only those belonging to “low-income families,” in other words, a family earning up to half a minimum salary or a total family income of up to three minimum salaries. 6

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program intended to grant the Productive Inclusion Bonus (BIP) if the worker, obligatorily, underwent a professional training course. However, beneficiaries would not be entitled to 50% of wages due in the event of dismissal from employment before the term stipulated in the contract (Departamento Intersindical de Estatísticas e Estudos Socioeconômicos, 2021b). The 2017 labor reform and the Bolsonaro government’s attacks on what little remained of the labor legislation and employment policies created an environment conducive to the growth of fragmented, low-efficiency, and coverage training programs, aiming to encourage informal work, especially in new digital work platforms. One example is the program created by the ministries of Citizenship and Education, the “Training Plus Progress” (Qualifica Mais Progredir). Launched in August 2021, the objective was to expand employment opportunities for beneficiaries of the Brazil Aid Program. With the combination of both programs, the government intended to offer free training to “individual microentrepreneurs,” also providing “financial education to students in the public school system” and “job opportunities” (Brazil, 2021a). The “Train Plus Advance” program is symptomatic of a set of actions promoted by the Bolsonaro government to generate “exit doors” for beneficiaries of cash transfer programs. However, the government did not specify how these “job opportunities” would be generated or how these courses would be offered. The program only vaguely mentions that the government intends to “promote the autonomy” of people enrolled in poverty alleviation programs through their beneficiaries’ access to online applications and training courses. This is suggested, for instance, by a course called “Collective Online.” Through a partnership established between the Coca-Cola Brazil Institute and Train Plus Advance, the course seeks to create a digital platform to find jobs and offer “short and objective video classes sent by WhatsApp on issues about the world of work” (Brazil, 2021b). By creating these programs, the government sends clear signals that its intention is to boost the application economy and the “platformization” of jobs in the country, transforming these devices into a new repository for the recruitment of precarious jobs without rights, especially aimed at society’s poorest youth. For the coalition of predatory interests that sustained the Bolsonaro government, it was not enough to deconstruct labor rights and public employment policies; it was necessary to go further still, creating measures that enhanced the use of precarious employment and insecurity, erasing once and for all the thin boundaries that delimit formal and informal work in the country.

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5 Final Comments: The Naturalization of Precarious Employability The current process of deconstruction of public employment programs in Brazil threatens to transform the phenomenon of informality into a new pattern of employability. The fact is that the destructuring of the policies that make up the public employment system, in a context of intense flexibility and precariousness of labor relations, reinforces and naturalizes the phenomenon of informality. Thus, employment policies, as organized since the 1988 Federal Constitution, are losing their form and function, as the recent dilution of labor legislation and the consequent proliferation of atypical and short-term contracts leave little room for public strategies to create qualified jobs. According to Machado da Silva (2002, p. 95), the notion of informality reflected “the other side” of a standard employment relationship characterized by the generalization of the wage norm. This notion, although ambiguous, acquired a practical-­ political sense by describing situations in which obstacles to the development of full employment predominated. Informality acquired a negative weight; a burden that especially affected countries that had not yet universalized the wage norm, with Latin American labor markets being paradigms of this situation. Opposing the “informality” of labor relations in Latin America to “formality” in Europe made it possible to think that the State decides, through legislation, on the set of social relations and their concrete expression, on their “formalization” (Lautier, 1993, p. 11). It also allowed us to think of the regulation of work as an element of delimitation of space of the possible uses of work. In Latin American societies, according to Machado da Silva (2002), the formal– informal pair represented a clear relationship of contradiction in expressing a break between the unattained ideal of full employment—favored by the experiments of post-World War II European Welfare States—and the situation of precariousness that characterized the vast majority of labor forms in the continent. Although idealized, these experiences became references for the construction of work societies constituted by minimum levels of material and ontological security, configuring “a specular relationship between these and Latin American countries” characterized by restricted and precarious wage relations (Machado da Silva, 2002, p. 90). However, as the problems of unemployment increased in the central countries, this specular relationship ceased to be attractive. The political viability of full employment, under conditions of intense flexibility of work, has been radically questioned. Thus, the assumptions underlying the structured and protected wage relationship became weakened in view of the new requirements that came to justify the inevitability and necessity for atypical work. As Machado da Silva (2002, p. 93) points out, this last justification is what allows us to understand the changes in the “cognitive dimension of the notion of informality.” Starting in the 1980s, and more recently with the advent of new modalities of underemployment and precarious work, the notion became increasingly devoid of meaning; denoting situations that could even be desirable from the point of view of

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personal success. Replacing the informal/formal pair we now have the pair “employability/entrepreneurship” that seeks to rebuild a work culture adapted to risk and insecurity (2002, p. 100). Fundamental to the change of the category pairs in question was the advent of more individualized employment relations and the “processes of subjectivity” organized around the “culture of entrepreneurship” (2002, p. 101). Far from representing a horizon of expectations related to the integration of subjects in the protections and guarantees that constituted the society of regulated and protected work, the employability/entrepreneurship pair acquires a sense of ideological conviction by instilling in the individual ethics of conformity to subordinate work in the competitive market. The pair in question transforms the meanings of the previous pair, engendering not a relationship of opposition to the lack of protection that characterized the other side of the boundaries of regulated work, but rather of conformity with the new employment situations marked by increasing insecurity and precariousness. In this sense, the operation of the new pair consists in erasing the records and references that laid the ground for the formal employment structure. It is as if the deformity that characterized the non-standardized relations of employment, called informal, became an ideal form. In addition, the terms employability/entrepreneurship assumed a “ubiquitous sense” in the discourse of bureaucrats, politicians, and business and union leaders, becoming at the same time “explanation and justification of new work situations” (2002, p. 104). The broad acceptance of these terms is symptomatic of a generalized process of cognitive withdrawal; leading these actors to renounce the problems that affect current labor relations, such as the absence of regulation and broader public employment policies, and to seek solutions within the narrow limits of entrepreneurship. However, relinquishing from thinking about solutions to the current crisis of labor regulation leads to postulating a future for the Welfare State based on reparations and conformity. On the one hand, we have the “moral reading of extreme poverty” that intends to manage exclusion and indignity within the science of “good inequalities” (Lautier, 2014, p.268); on the other, the call for voluntary engagement with entrepreneurship that in its ineffective comings and goings imprisons the individual in a kind of mental workhouse. What we have here is a whole culture of resignation announcing itself. With the category pair of employability/entrepreneurship organizing the new labor relations in Brazil, we are glimpsing at a new type of individual adapted to extremely precarious modes of existence that are devoid of sociability and public meaning. As can be inferred from the measures to dismantle labor legislation and employment policies discussed in this chapter, the consortium of predatory interests that brought Bolsonaro to power, with the explicit complicity of the business community, wants to destroy the boundaries that delimit the construction of a minimally civilized capitalism in the country. If such interests are successful, only a regime of employability without rights organized under the most savage rules of the market will remain.

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References Alesina, A., Favero, C., & Giavazzi, F. (2015). The output effect of fiscal consolidation plans. Journal of International Economics, 96(1), 19–42. Amorim, B., & Bilo, C. (2019). Seguro-desemprego ao redor do mundo: uma visão geral (Nota técnica IPEA, n. 55). IPEA.  Retrieved February 10, 2021, from https://repositorio.ipea.gov. br/bitstream/11058/9308/1/NT_55_Disoc_Seguro_desemprego%20ao%20redor%20do%20 mundo_uma%20vis%c3%a3o%20geral.pdf Bauer, M.  W., & Knill, C. (2014). A conceptual framework for the comparative analysis of policy change: Measurement, explanation and strategies of policy dismantling. Journal of Comparative Policy Analysis: Research and Practice, 16(1), 28–44. Bartholo, L., Veiga, R., & Barbosa, R. J. (2021, August 17). O que muda no “Novo Bolsa Família”. Retrieved August 20, 2021, from. https://piaui.folha.uol.com.br/o-­que-­muda-­no-­novo-­bolsa-­ familia/?fbclid=IwAR2UmbfrBVituDlBWCup_ZMuI6GfLjCO8R-­eU9a3jPagSPXmbKX6-­F 3qHTw. Béland, D., & Schlager, E. (2019). Varieties of policy feedback research: Looking backward, moving forward. Policy Studies Journal, 47(2), 185–205. Bengtsson, M., Porte, C., & Jacobsson, K. (2017). Labour market policy under conditions of permanent austerity: Any sign of social investment? Social Policy and Administration, 51(2), 367–388. Bonoli, G. (2010). The political economy of active labor-market policy. Politics and Society, 38(8), 435–457. Bonoli, G., & Natali, D. (2012). The politics of the new welfare state. Oxford University Press. Brazil. (2021a). Governo Federal anuncia nova fase do Programa Qualifica Mais. Agência Brasil Notícias. Retrieved October 15, 2021, from https://www.gov.br/pt-­br/noticias/ assistencia-­social/2021/08/governo-­federal-­anuncia-­nova-­fase-­do-­programa-­qualifica-­mais Brazil. (2021b). Curso on-line oferece capacitação para o mercado de trabalho. Agência Brasil Notícias. Retrieved October 27, 2021, from https://www.gov.br/pt-­br/noticias/ assistencia-­social/2021/08/curso-­on-­line-­oferece-­capacitacao-­para-­o-­mercado-­de-­trabalho Burnham, P. (2001). New labour and the politics of depoliticization. British Journal of Politics and International Relations, 3(2), 127–149. Cardoso, A. M. (2010). A construção da sociedade do trabalho no Brasil: Uma investigação sobre a persistência secular das desigualdades. Ed. FGV. Cardoso, A. M. (2013). Ensaios de sociologia do mercado de trabalho brasileiro. Ed. FGV. Cardoso, J. C., Jr., Gonzales, R., Stivali, M., Amorim, B., & Vaz, F. (2006). Políticas de emprego, trabalho e renda no Brasil: desafios à montagem de um sistema público, integrado e participativo (Texto para Discussão n. 1237). IPEA. Retrieved June 16, 2021, from https://portalantigo. ipea.gov.br/portal/images/stories/PDFs/TDs/td_1237.pdf Clayton, R., & Pontusson, J. (1998). Welfare-state retrenchment revisited: Entitlement cuts, public sector restructuring, and inegalitarian trends in advanced capitalist societies. World Politics, 51(1), 67–98. Costa, P.  V., Müller, L.  H., Cardoso, M.  M., Souza, M., & Lima, L.  M. A. (2014). A estratégia de inclusão produtiva urbana no Plano Brasil sem Miséria. In T. Campello, T. Falcão, & P. V. Costa (Eds.), O Brasil sem Miséria (pp. 289–321). MDS. Dean, H. (2007). The ethics of welfare-to-work. Policy and Politics, 35(4), 573–589. Departamento Intersindical de Estatísticas e Estudos Socioeconômicos. (2021a). Com atraso de quatro meses, governo relança o Programa Emergencial de Manutenção do Emprego e da Renda. (Nota Técnica, n. 256). São Paulo. Retrieved September 27, 2021, from https://www. dieese.org.br/notatecnica/2021/notaTec256programaManEmprego/index.html?page=1 Departamento Intersindical de Estatísticas e Estudos Socioeconômicos. (2021b). Câmara aprova substitutivo à Medida Provisória n° 1.045 e aprofunda precarização. (Nota Técnica. n. 262). DIEESE.  Retrieved September 29, 2021, from https://www.dieese.org.br/notatecnica/2021/ notaTec262MP1045Minirreformatrabalhista.pdf

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Dinan, S. (2018). A typology of activation incentives. Social Policy & Administration, 53(1), 1–15. Fleury, S., Lanzara, A.  P., Pinho, CES., Pernasetti, F., Lobato, L., Burlandy, L., Senna, M., Teodoro, R., & Fava, V. (2021). Resolvendo a quadratura do círculo: austeridade com responsabilidade social ou ‘Reforma da Lei dos Pobres’ à brasileira? CEE-FIOCRUZ. Retrieved November 11, 2021, from https://cee.fiocruz.br/sites/default/files/futuros%20da%20 prote%C3%A7%C3%A3o%20social_texto%20completo_pdf de São Paulo, F. (2019, November 5). Pacote de Guedes quer eliminar o FAT e mais 247 fundos públicos. Folha de São Paulo. Retrieved October 10, 2021, from https://www1.folha.uol.com. br/mercado/2019/11/pacote-­de-­guedes-­quer-­eliminar-­o-­fat-­e-­mais-­247-­fundos-­publicos.shtml Furtado, D. L. (2020). Graduação tecnológica: O desafio de profissionalizar no ensino superior (2000–2014). Editora Appris. Gallego, A., & Marx, P. (2017). Multi-dimensional preferences for labour market reforms: A conjoint experiment. Journal of European Public Policy, 24(7), 1027–1047. Green-Pedersen, C. (2002). The politics of justification: Party competition and welfare state retrenchment in Denmark and The Netherlands from 1982 to 1998. Amsterdam University Press. Green-Pedersen, C., Christiansen, F.  J., Euchner, E.-M., Jensen, C., & Turpenny, J. (2012). Dismantling by default? The indexation of social benefits in four countries. In M. W. Bauer, A. Jordan, C. Green-Pedersen, & A. Héritier (Eds.), Dismantling public policies: Preferences, strategies, and effects (pp. 129–151). Oxford University Press. Haffert, L., & Mehrtens, P. (2014). From austerity to expansion? Consolidation, budget surpluses, and the decline of fiscal capacity. Politics and Society, 43(1), 119–148. Hertel-Fernandez, A. (2013). Dismantling policy through fiscal constriction: Examining the erosion in state unemployment insurance finances. Social Service Review, 87(3), 438–476. International Labour Office. (2017). World social protection report 2017/19: Universal social protection to achieve the sustainable development goals. ILO. Retrieved July 12, 2021, from https://www.ilo.org/wcmsp5/groups/public/%2D%2D-­dgreports/%2D%2D-­dcomm/-­publ/ documents/publication/wcms_604882.pdf Jensen, C., Knill, C., Schulze, K., & Tosun, J. (2014). Giving less by doing more? Dynamics of social policy expansion and dismantling in 18 OECD countries. Journal of European Public Policy, 21(4), 528–548. Jensen, C., Arndt, C., Lee, S., & Wenzelburger, G. (2017). Policy instruments and welfare state reform. Journal of European Social Policy, 28(2), 161–176. Korpi, W. (1983). The democratic class struggle. Routledge and Kegan Paul. Korpi, W., & Palme, J. (2003). New politics and class politics in the context of austerity and globalization: Welfare state regress in 18 countries, 1975-95. American Political Science Review, 97(3), 425–446. Krein, J. D., Manzano, M., Teixeira, M. O., & Lemos, P. R. (Eds.). (2021). O trabalho pós-reforma trabalhista. CESIT. Lameiras, M.  A., Corseuil, C.  H., Ramos, L., & Russo, F.  M. (2021). Desempenho recente do mercado de trabalho e perspectivas para o ano (Carta de conjuntura, n. 52). IPEA. Retrieved November 30, 2021, from https://www.ipea.gov.br/cartadeconjuntura/index.php/2022/03/ desempenho-­recente-­do-­mercado-­de-­trabalho-­e-­perspectivas-­2/ Lanzara, A. P. (2016). Ativismo burocrático, políticas sociais intersetoriais e os desafios da inclusão produtiva no Brasil. Desenvolvimento em Debate, 4(2), 63–81. Lanzara, A. P. (2018). O seguro social e a construção da proteção social no Brasil. DADOS–Revista de Ciências Sociais, 61(2), 463–502. Lautier, B. (1993). Informalidade das relações de trabalho e cidadania na América Latina. Cadernos CRH, 18, 5–48. Lautier, B. (2014). O governo moral dos pobres e a despolitização das políticas públicas na América Latina. Cadernos CRH, 17(72), 463–477. Machado da Silva, L. A. (2002). Da informalidade à empregabilidade (reorganizando a dominação no mundo do trabalho). Cadernos CRH, 15(37), 81–109.

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Marx, P., & Schumacher, G. (2016). The effect of economic change and elite framing on support for welfare state retrenchment: A survey experiment. Journal of European Social Policy, 26(1), 20–31. Moretto, A., Gimenez, D. M., & Proni, M. W. (2003). Os descaminhos das políticas de emprego no Brasil. In M. W. Proni & W. Henrique (Eds.), Trabalho, mercado e sociedade: o Brasil nos anos 90. (pp. 231–278). Ed. Unesp. Moretto, A. (2010). Políticas de emprego e sua contribuição à redução da informalidade e discriminação no mercado de trabalho brasileiro: a experiência recente. (Série Trabalho Decente no Brasil). OIT.  Retrieved January 12, 2021, from https://www.ilo.org/wcmsp5/groups/ public/%2D%2D-­americas/%2D%2D-­ro-­lima/%2D%2D-­ilo-­brasilia/documents/publication/ wcms_227070.pdf Mourão, A. N., Almeida, M. E., & Amaral, E. L. (2013). Seguro-desemprego e formalidade no mercado de trabalho brasileiro. Revista Brasileira de Estudos Populacionais, 30(1), 251–270. O Globo. (2021, July 23). Na reforma ministerial, equipes de Guedes e Onyx já disputam FAT e FGTS, após recriação do Ministério do Emprego. O Globo. Retrieved October 11, 2021, from https://oglobo.globo.com/economia/na-­reforma-­ministerial-­equipes-­de-­guedes-­onyx-­ja-­ disputam-­fat-­fgts-­apos-­recriacao-­do-­ministerio-­do-­emprego-­25122302. de Oliveira, R. V. (2007). Momento atual da política pública de qualificação profissional no Brasil: Inflexões e desafios. Ariús, 13(1), 51–59. Oreiro, J. L. (2018). Só a retomada do desenvolvimento econômico, não o ajuste fiscal perpétuo, pode salvar o Brasil do colapso. Revista NECAT, 7(14), 8–19. Palier, B. (2007). Tracking the evolution of a single instrument can reveal profound changes: The case of funded pensions in France. Governance, 20(1), 85–107. Pierson, P. (1996). The new politics of the welfare state. World Politics, 48(2), 143–179. Pierson, P. (2011). Introduction: Investigating the welfare state at century’s end. In P. Pierson (Ed.), The new politics of the welfare state (pp. 11–16). Oxford University Press. Pinho, C. E. S., & Lanzara, A. P. (2022). Democracia vilipendiada, privatização e desmonte de políticas públicas sob o governo Bolsonaro. In J.  C. Cardoso Junior & R.  Marques (Eds.), Dominância financeira e privatização das finanças públicas no Brasil (pp.  347–383). FONACATE. Rueda, D. (2006). Social democracy and active labour-market policies: Insiders, outsiders and the politics of employment promotion. British Journal of Political Science, 36(3), 385–406. Schmidt, V.  A. (2012). Does discourse matter in the politics of welfare state adjustment? Comparative Political Studies, 35, 168–193. Schneiderman, D. (2018). Constitutionalizing economic globalization. Investment rules and democracy’s promise. Cambridge University Press. Silva, S.  P. (2018). Financiamento das políticas públicas de trabalho e renda no Brasil: Uma análise a partir da trajetória operacional do Fundo de Amparo ao Trabalhador (FAT) (Texto para Discussão 2427). IPEA. Retrieved March 12, 2021, from https://repositorio.ipea.gov.br/ bitstream/11058/8932/1/td_2437.pdf Silva, S. P. (2020). A inclusão produtiva como eixo de política de proteção social: contexto latino-­ americano e questões para a realidade brasileira (Texto para Discussão 2605). IPEA. Retrieved March 15, 2021, from https://repositorio.ipea.gov.br/bitstream/11058/10293/1/td_2605.pdf Slobodian, Q. (2018). Globalists: The end of empire and the birth of neoliberalism. Harvard University Press. Slothuus, R. (2007). Framing deservingness to win support for welfare state retrenchment. Scandinavian Political Studies, 30(3), 323–344. Streeck, W. (2007). German capitalism: Does it exist? Can it survive? In C. Crouch & W. Streeck (Eds.), Political economy of modern capitalism (pp. 45–76). Sage. Streeck, W., & Thelen, K. (Eds.). (2005). Beyond continuity: Institutional change in advanced political economies. Oxford University Press. Swenson, P.  A. (2012). Capitalists against markets: The making of labor markets and welfare states in the United States and Sweden. Oxford University Press.

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Chapter 5

Pension System at Crossroads: Between Frail Solidarity and Financial Appropriation Fernanda Pernasetti

1 Introduction Approved in 2019, the most recent pension reform created, along with the labor reform and the new fiscal regime (known as the Expenditure Ceiling Amendment), a triad of attack on the constitutional guarantees of social protection that characterized the Brazilian State of the New Republic, hallmarking a significant inflection of its role in relation to the parameters of mediation of the national distributive conflict. Such measures, prioritized by the federal government since the parliamentary– legal–media coup that interrupted the Dilma Rousseff administration in 2016, brought on a significant reduction in the government’s scope of action on crucial policies for workers and for everyday social reproduction in a country marked by labor informality and a Welfare State that was never fully implemented. In a world scenario where neoliberalizing dynamics are hegemonic, Brazil has experienced advances and retreats in the field of social policies in recent decades, according to the concrete possibilities, objectives and different levels of organization of political actors in a democratic environment deeply influenced by structural inequalities and under the increasing influence of globalized finance. From an international standpoint, since the systemic crisis of the 1970s, and particularly in the countries of central capitalism, a consistent interdisciplinary literature has sought to monitor and investigate the transformations implemented in social policies, which involved both processes of reform and retraction, as well as a remarkable resilience of social protection arrangements, attributed to trajectory dependencies and the high F. Pernasetti (*) Instituto de Pesquisa e Planejamento Urbano e Regional da Universidade Federal do Rio de Janeiro (Ippur/UFRJ), Rio de Janeiro, Brazil Centro de Estudos Estratégicos da Fundação Oswaldo Cruz (CEE-Fiocruz), Rio de Janeiro, Brazil © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Fleury (ed.), Social Policy Dismantling and De-democratization in Brazil, Societies and Political Orders in Transition, https://doi.org/10.1007/978-3-031-35110-5_5

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political costs of disarticulating these protective networks (Pierson, 1996, 2001). More recently, however, the expansion of financial dominance over the entirety of the capitalist system—despite the occurrence of a new crisis starting in 2008—reinforced a vision that associates the Welfare States and their social policies with the cause of the fiscal imbalances faced by several countries (Naczyk & Palier, 2014). Thus, a political-economic lexicon was consolidated to bring about permanent austerity scenarios in which an agenda of reducing so-called “social spending” is imposed, expanding the influence and performance of large investment funds— namely private pension funds. Despite certain particularities—such as having been the world’s seventh largest economy between 2010 and 2014—Brazil was not exempted from this trend. In fact, since the 2016 coup, the agenda of fiscal austerity has imposed itself on the national political arena with unprecedented force. The democratic resistance has been disrupted to the point of not being able to prevent blatant setbacks in social rights and their financing logic. Given this scenario, this chapter analyzes the reform processes that have shaped the public pension system and paved the way for the advancement of private pension plans in Brazil since the 1988 Federal Constitution (CF/88) to demonstrate the idea that this social policy is undergoing an active dismantling process (Bauer & Knill, 2014). This does not mean ignoring that the public pension system still resists and mobilizes the second largest item of the federal budget, occupying a fundamental place in everyday social reproduction in most of the country’s municipalities. However, since the creation of the Brazilian social security system1 in 1988, each decade of recent Brazilian democratic history has seen the approval of one or more regulatory changes in its pension system—in 1998, 2003, and 2019. Despite the differences in political moments, the social actors involved, and the different strategies used to approve these changes, it is not difficult to recognize that all these reforms took the opposite direction to the construction and strengthening of a social security system characterized by solidarity and universality, as provided for in the Constitution. Thus, in a broader perspective, what our analysis will seek to answer is which elements make up this “unity” of dismantling as a backdrop for the Brazilian pension system. What factors might explain why, despite the constitutional consolidation of social security and the break with the logic of citizenship regulated by working conditions, the structure of the Brazilian pension system should undergo reforms that, despite their nuances, point to changes toward its dismantling and to the strengthening of private pension plans? To face this analytical challenge, the chapter explores a double hypothesis: the fronts that defend the public system argue that the ambiguities that involve the historical approach to the pension system from the perspective of social insurance must be taken into account—or the misrepresentations that move it away from a solidarity conception and closer to the mutualist logic that marked its origins, as argued by Lanzara (2018). In parallel, it is essential to understand how the advance of  The notion of social security in Brazil involves Health, Social Assistance, and the Pension System within a perspective of universality, comprehensiveness and equality, approaching the Beveridgean notion instead of the classic Bismarckian contributory model. 1

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financialization in Brazil, and the social actors involved in this arena, has created incentives for workers’ migration to private pension plans, reinforcing an unparalleled growth of the assets managed by private pension entities (Pernasetti, 2021). On the one hand, at the same time that the consolidation of social insurance reinforces the institutional resilience of the pension system—whose general regime (RGPS), as we will see, distributes most of its benefits at an average value of up to 2 minimum wages—the emphasis on the contributory character of the pension system, predominant in the narratives of the epistemic austerity community (Pinho, 2021), ends up reinforcing a view that “the pension system is only for a few,” restricted to formal workers, and that, therefore, its transformations would only affect the “elite” of the national labor world.2 The predominance of a merely fiscal approach—where complaints about the alleged deficit of the pension system stand out—combined with the historical-structural fact that most Brazilian people work in informality, ends up hiding the constant reduction in the level of benefits of the general regime being promoted by the reforms, weakening the discussion on the redistributive aspects of the pension system, and, above all, its importance as an inextricable pillar of the tripartite structure of social security—alongside health (universalized through the Unified Health System—SUS), and social assistance (though the Unified Social Assistance System—SUAS). If we add to pension benefits the amounts of assistance allocated via payment of the Continuous Cash Benefit (Benefício de Prestação Continuada—BPC) and the monthly lifetime income paid by age or disability, “we have a scenario in which 82% of elderly Brazilians are protected by social security income in their old age” (Dieese & Anfip, 2017, p. 41). In addition, studies show that RGPS funds, which make up the family income of over 30 million beneficiaries, directly and indirectly, influence the quality of life of almost 100 million people—especially school-age children and youth, who do not have any other mechanism for income generation and social protection (Dieese & Anfip, 2017). Despite such evidence on the relevance of pension income and its externalities, when it comes to debating reform proposals, the emphasis on fiscal aspects and the mutualist character of social security end up reinforcing the erroneous view that only the “privileged portion” of formal workers should discuss the parameters of access to benefits such as pensions—since the topic does not concern informal workers, who do not even meet the requirements to access the public pension system. This chapter thus discusses how the popular fronts that defend a universal pension system, organized under solidarity parameters, are weakened, restricting a more effective opposition to reforms to parliamentarians and to calculations involving its bases of support. The other aspect of the explanatory hypothesis for the successive reforms undergone by the pension system is the fact that it is continually pressured by the growth  As a matter of fact, from the point of view of the civil service pension system, the inequalities between the benefits of the elite of the republic and other servants (mostly in the areas of health and education) contributes to foster this logic. According to Medeiros and Souza (2014), the regressivity of the pensions of the fractions of the elite in government contributes with 4% of all income inequality in the country. 2

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of financialization in Brazil, especially with the primacy of a rentier and non-­ developmentalist logic attached to the mechanism that continually reproduces the national public debt—or, quite simply put, the logic of “financialization for interest” (Bruno et al., 2011). At its limit, the structure of the pension system amasses savings funds that, in order to grow in value, can invest both in the productive and in the financial sectors, with the latter being the current consolidated trend, given Brazil’s high interest rates. The constant regulatory changes that have modified the system structurally (such as the 1998 one), created a private pension system for civil servants (such as the one in 2003), or established parametric changes in access to benefits (like in 2019)—measures that, by multiple paths that we will seek to discuss—end up reinforcing a movement of incentive and migration to private pension plans. What is at stake, in this case, is the public or private management of savings that originated from labor, which has to do with a worker’s lifetime, and which can both affect the long-term financing of the economy and is affected by its overall performance with regard to income levels and degree of formalization. Starting on this path, in the section following this introduction, this chapter relies on the literature produced on the shaping of social rights in Brazil, and on the more general bibliography on policy dismantling already discussed in this book’s introductory chapter to argue that the vulnerability of the Brazilian pension system to successive reforms, in part, relates to the historical construction of social security as social insurance, and the defense of a non-solidary approach that is restricted to contributory workers with regard to the reach and scope of this insurance. Even if the consolidation of the rural pension and its universalization in the 2000s meant, as provided for the 1988 Federal Constitution, a relativization of its strictly contributory profile (with important gains for the fight against rural poverty and regional inequalities), successive reforms make it possible to identify the construction of a narrative in which pension beneficiaries represent a “privileged” portion of the universe of national workers. This stage discusses the changes implemented by each reform and seeks to analyze the justifications and the coalition of forces that gave them impetus in each context, contributing to weaken the involvement of multiple actors around the defense of the pension system as a right to be universalized. In the third section, the chapter will explore, more explicitly, the connection between the successive pension reforms and the push toward supplementary or private pension plans in Brazil, highlighting how the profile of these institutional investors has aligned, in recent decades, with the pattern of financialization for interest dominant in the country. With an equity level that has quadrupled in the last 30 years, private pension plans—both open and private—share the blatantly conservative profile that historically characterizes Brazilian financial actors. This means that, currently, supplementary pension plans hold equity corresponding to 27% of the national GDP, mostly invested in the acquisition of short-term public securities (Pernasetti, 2021). This private enrichment results in a dynamics of draining public funds to pay interest and public debt charges—precisely where these funds are invested—and, at the same time, perpetuating this mechanism: if public debt pressures the budget on the one hand, the rhetoric of austerity motivates new reforms and cuts in social spending on the other.

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In the final section, the two explanatory hypotheses about the repeated re-­ regulation of the Brazilian pension system are summarized, pointing out how the understanding of this scenario can be fundamental to the challenge of recovering a view of the pension system as a right and as workers’ savings, with the potential to act as a source of long-term financing for new national development projects, and not subsumed to the rentier logic of individual accounts and earnings.

2 Social Security as Non-universal Social Insurance When it comes to understanding the lack of resistance of workers to the successive reforms in the Brazilian pension system, the first question that comes to mind is: how can we expect the popular defense of a right that is not perceived as such? How can we expect the defense of a universalizing perspective of social security—a right never fully universalized—which goes back to the saving capacity of workers in a low-income country, and, precisely for this reason, is subject to privatist pressures from actors interested in profiting from the management of these sums? To understand this first trait that characterizes the discourses around the pension system in Brazil, we must briefly return to how this social policy was consolidated and its features. Born from mutualist corporate initiatives against the backdrop of a labor world that was mostly agrarian and marked by centuries of slavery—in other words, by the devaluation and racialization of human labor—Brazilian social protection was historically built pari passu to the figure of a formal, urban worker who, to this day, does not resemble most of the country’s working age population. Nevertheless, it is essential to consider that, even after successive reforms, the pension system remains fundamental to the country’s day-to-day social reproduction, has an undeniable redistributive character—especially for small municipalities and to the North and Northeast regions—in addition to positive externalities regarding making up the family income of informal workers and children. Several studies address the social issue in Brazil from the point of view of its interface with the development of the Brazilian State and of national capitalism (Aureliano & Draibe, 1989; Oliveira & Teixeira, 1989; Cardoso Jr & Jaccoud, 2009). In general, they point out that, although free labor emerged as a demand for the establishment of a true labor market in the country, it was not accompanied by access to land for former slaves and the free poor population in urban centers (Fernandes, 1976), leading to the first factor to consolidate informality as a characteristic trait of the national labor world. Given the burden of prejudices and stereotypes that surround the country’s Black population and rural workers, these two portions of the population have historically endured as the most vulnerable elements of the national labor world, even after the 1988 Federal Constitution. Despite struggles involving workers’ organizations in the country since the end of the nineteenth century, historical bibliography identifies that legislation on social

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policies began to appear in National Congress in 1923.3 This was the year when the Retirement and Pension Fund (CAP) was created for railway workers. From this milestone, various CAPs began to multiply, basically organized by companies, consolidating an eminently mutualist feature of the first social security initiatives in the country. It is noteworthy that, although the political scenario in Brazil and in the world pointed to the realization that the market had proved itself unable to produce and maintain peace without the regulatory action of the State, the labor legislation that began to emerge at the beginning of the twentieth century did not necessarily represent a danger to the country’s ruling class because labor relations in the agrarian world, still predominant in the national economy at the time, remained on its margins (Vianna, 1976). From 1933 on, offering an extension to the benefits of stability, retirement, and pensions, private CAPs, now subject to state influence by the Estado Novo, began to be transformed into the Institutes of Retirements and Pensions (IAPs), no longer organized in a corporate logic, but originating from professional categories—such as seafarers, railway workers, bankers, merchants, industrialists, and civil servants. The decrees through which they were created, however, operated the separation between social security and health, no longer seen as an attribution of social security institutions, becoming conditioned to the existence of available funds. From the CAPs to the IAPs, the changes introduced by way of social security management in these years should be seen as politically determined amid the broader process of building a new standard of relationship between the State and civil society that marks the period. Wanderley Guilherme dos Santos (1979) suggests that the key concept for its understanding is that of a “regulated citizenship,” which could be described as “the concept of citizenship whose roots lie, not in a code of political values, but in a system of occupational stratification, and that, furthermore, this system of occupational stratification is defined by legal norm” (Santos, 1979, p. 75). The citizen with social rights belonged to the professional categories that interested the industrial development strategies of a State whose institutional engineering was being built: whether as a civil servant or private employee, the focus was on workers who had their work record booklet signed [which is to say, who were legally recognized, formalized workers with full rights]. Unlike the movement in the central countries that led to building the idea of citizenship—which, according to T.H. Marshall (1950), involved the construction of civil rights, political rights and only then, social rights—in the Brazilian case, the latter emerged in a disconnected manner and even in the absence of the other rights. From the 1930s on, in the context of legitimization of the authoritarian political regime of President Getúlio Vargas’ New State, the construction of the Brazilian State bureaucracy was accompanied by bargaining around social demands and the appropriation of the political lexicon of decades of struggles for labor rights, which resulted in the construction

 Decree No. 4682, of January 24, known as the Eloy Chaves Law. Before that, there were initiatives exclusive to the military and some civil servants, such as the “montepios.” 3

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of the figure of a Brazilian unionized worker and bearer of social rights, but duly submitted to the control of the central power of the State (de Castro Gomes, 2005). It is essential to remember that such regulatory centralization consolidated, even at this historical moment, a branch of management of social security entities operating under the logic of “capitalization.” In other words, more concerned with how much these entities were accumulating and how much their balance was than with the externalities generated by the logic of distribution—which would compensate for imbalances in the accumulation process from the distribution of benefits to workers. The focus of the newly created pension plans was therefore to save funds. As pensions expanded from the point of view of the number of workers covered, there was a clear concern about reducing their scope, either by inserting new concession criteria or by reducing the final amount of the benefit. This logic has remained in the collective imagination even after the re-democratization and construction of social security. Moreover, the capitalization of social insurance always provided funding that would strongly contribute to the new stage of development of national capitalism, based on industrialization by import substitution. The model of capitalization or of social security insurance managed by the State (even if it did not adequately cover its own contributions), when guided by the bureaucratic logic of the restriction of expenses, became an amount that, according to “good financial management,” should be invested in order to grow or at least to neutralize its inflationary devaluation. Therefore, pension funds became a kind of financial accumulation mechanism in the hands of the State, which in the mid-twentieth century began to be used for the purchase of public securities and in support of the State's effort to industrialize the country. Oliveira and Teixeira (1989) present a series of decrees and laws that authorized or determined the investment of social security reserves in economic sectors of interest to the State, such as the manufacturing of locomotives and the electrification of railways, agricultural, and industrial credit initiatives in the area of pulp and paper, in the steel industry (with the setting up of the National Steel Company—CSN), in the creation of the São Francisco Hydroelectric Company, and the National Engine Factory, among others. In a paradigmatic paper in the field of social security, Oliveira and Teixeira (1989) oppose the emerging social legislation to the analysis of concrete budget data to find the modeling patterns of the Brazilian social security structure in different historical periods, marked by the alternation between phases of containment and expansion. In the same vein, in an attempt to characterize the specificities of the Brazilian “welfare state,” Aureliano and Draibe (1989), build a periodization of the social agenda from the changes in political regimes. For this reference bibliography, the solutions, or the type of social protection historically built in the country, reflect political struggles that have imprinted “the meritocratic-particularist mark on our social protection system, which has enormous dynamism arising from economic expansion and is, at the same time, barbarically regressive” (Aureliano & Draibe, 1989, p. 156). Outside of this entire mechanism linking rights, structuring social protection, and providing an impetus to dynamize Brazilian capitalism, a huge mass of informal workers was left unattended, as well as the totality of rural workers.

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From the establishment of the civilian-military dictatorship in 1964, the Brazilian capitalist state began to act as an arbiter and regulator of the interests of the dominant factions, which entailed not only managing intra-elite conflicts but adopting compensatory measures from the point of view of social policy. The context of industrialization and accelerated urbanization put workers’ needs back on the agenda, causing social insurance to be extended to rural workers with the creation of the 1963 Rural Worker Statute. This, however, took place in a depoliticized manner, on an assistance basis, and by hiring the private initiative to provide services (especially regarding medical care) (Oliveira & Teixeira, 1989). From the perspective of the development of private pension in the country, beginning in the late 1960s, the segment linked to pension funds gained momentum due to the creation of Petros, a workers’ fund from the Brazilian oil industry, Petrobras. Following a trend started in the United States of America, pension funds began to emerge as important Brazilian actors, both from the perspective of economic modernization and as an alternative to reduce the pressures of civil service on social security. In the same period, between 1977 and 1978, through a series of decrees, the federal government authorized private pension funds to act for profit, incentivizing this sector by defending the idea—in line with international trends—that labor savings could boost the development of a Brazilian capital market (Pinheiro et al., 2005). While privatist forces acted to influence state decisions favorable to the capitalization of workers’ pension savings, the process of democratic reopening in the country was driven by a strong civil society movement formed by the sanitary movement, the movement for urban reform, the new unionism, the new urban social movements, and research organizations. While the democratic current was guided by the preservation of the public sphere to later democratize it, the center-right bloc formed by parliamentarians linked to the military sought to contain the democratization process as much as possible, “in defense of order.” Accompanying the democratic transition process on the “conservative modernization of the country” from a sociological perspective, Vianna (1989) draws attention to the fact that Brazilian republican tradition has centralist, corporate, and authoritarian traits, which opposed the full democratization of the public sphere as desired by social movements. In this sense, the new political Right that emerges at this historical moment and that descends directly from the authoritarian branch of the old republican tradition— although modern and “civilized” (in that it opposed the explicit dictatorial violence) stood beside the old “truculent and militarized right, especially in the latifundia,” making it capable of effective intervention in the field of institutionalized politics, and advancing in the opposite direction “to the State’s direct efforts toward economic development and social issues” (Vianna, 1989, p. 44). Even with the defeat of the military dictatorship and the approval of a very progressive Constitution, this panorama is crucial for our understanding of how the institutionalized political Right was able to almost immediately begin a slow but consistent process of dismantling the structure of social security. In order to build mechanisms to stabilize the system, which would break with the logic of exclusive social insurance for formal workers, the chapter of the 1988

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Federal Constitution on Social Order determined that the financing of Social Security—which had a Beveridgean character—would involve wage-based contributions made by employees, employers, and self-employed; contributions on the net income of financial companies (CSLL); and contributions based on the revenues of companies (Contribution for the Financing of Social Security—Cofins). The diversification of the funding bases of the system, regardless of the contributory capacity of workers, was what allowed social security to guarantee equivalence of benefits and services to urban and rural populations, consolidating the end of a citizenship regulated by formal labor relations. By equating the floor of urban and rural benefits around the national minimum wage, the Constitution consolidated the idea of social security as universal social insurance, and in accordance with the principle of equity of costing. According to this principle, the parameter of social protection should be the needs to be met, and not only the contributory capacity of beneficiaries, given the differences between urban and rural clientele. In operational terms, rural producers were formally classified into three categories: rural employees, individual taxpayers, and special insureds4—although, for the pension system, almost all this clientele corresponds to the latter category, given the low degree of formalization of rural labor, the precariousness of ties and the seasonality of occupations (Valadares & Galiza, 2016). However, the 1988 Federal Constitution did not establish this mechanism’s mode of operation, which allowed, almost immediately, a specialization of the sources of financing in relation to their destination, contrary to the law. Since Social Security was the collector of contributions, it reserved payroll for itself, and the funds resulting from contributions on profits (Finsocial, Social Investment Fund, and then CSLL), legally challenged as double taxation by business owners until 1993, were allocated to Health and the funds on revenues (Cofins) were allocated to Assistance (Fleury & Alves, 2004, pages not available). In fact, contrary to what the Constituent Assembly had foreseen, the 6-month period for the approval of fundamental and supplementary laws was not observed in the case of social security (Baptista, 1998) and it became almost a consensus within the (neo)liberal field to defend the imperative that it was necessary, from now on, to “reform social security.” For this group, the expansion of its coverage, even within a common budget, was doomed to mathematical unfeasibility. From a political point of view, it can be said that the forces of the political left and the social movements that had managed to guarantee the chapter on Social Order to their liking, began to suffer numerous setbacks, particularly from an economic standpoint, put on the agenda by the conservative and neoliberal forces from the 1990s onward. The state reform, the economic stabilization, and the creation of the Real Plan, then consolidated the foundations for a long process of state weakening in the redistributive field. This was largely favorable to financial gains in a context in which the economy was being opened to foreign capital (mainly speculative) and the mechanism that reproduced the public debt was strengthened—and whose guarantee of

 Whose contribution is not a fundamental requirement for access to social security benefits.

4

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payment was also contained in the Constitution as a duty of the State. This is how, even while being a part of the social security triad and having constitutionally defined sources of financing, the argument of the pension system’s “actuarial unsustainability” renews itself and feeds several rounds of pension reforms and changes in the rules of access to its benefits.

2.1 The 1998 Dismantling: The First Pension Reform Investigating the political landscape in which the reform proposal presented by the Executive in 1998 took place, Fleury and Alves (2004) point out the main features of the debate and the organization of the different political actors in terms of support or opposition to the first proposal for the pension reform in the New Republic. According to the authors, the discursive strategy of what was then the Ministry of Social Security and Assistance of President Fernando Henrique Cardoso’s (FHC) administration involved the emphasis on the “technical” character of the amendment’s fiscal content, reinforcing the participation of IPEA [the Institute for Applied Economic Research] technicians in preparation for the project, while business support was given in a merely diffuse and indirect way. In turn, “the opposition gathers in a coalition involving the Unified Workers’ Central (CUT), the Workers’ Party (PT), associations of retirees and pensioners5, and associations and unions of the area’s technicians6 (Fleury & Alves, 2004, p.  999), mobilized around the Social Security and Family Subcommittee of the Chamber of Deputies7, and consolidating a position in defense of constitutional rights and questioning the argument of an existing social security crisis8. As a result of this clash, although the government did have a majority in Congress, the 1998 reform only gathered enough political momentum to approve a change in the formula for adjusting RGPS pensions, not moving forward with the desired privatization of public servants’ pensions. By means of Constitutional Amendment No. 20, of 1998, the proof of “length of service” was replaced by the “time of contribution” of workers in the calculation for general retirement through the National Institute of Social Security (INSS). Likewise, proportional retirement was eliminated9; benefits above the floor were no

 Brazilian Confederation of Retirees, Pensioners and Elderly (Cobap) and National Movement of Retired Public Servants and Pensioners (Mosap). 6  National Association of Tax Auditors of the Brazilian Federal Revenue Service (Anfip); National Federation of Fiscal and Fiscal Auditors of Urban Activities (Fenafisc); National Union of Fiscal Auditors of the Federal Revenue Service of Brazil (Sindifisco). 7  Together, the Chamber of Deputies and the Federal Senate make up National Congress, the bicameral legislative of the Brazilian national political system. 8  At that time, the deficits generated by the difference between revenue and expenditure were proportionally higher in the public segment than in the general regime administered by the INSS. 9  Proportional retirement allowed the taxpayer to retire earlier, but with a lower benefit. That is, before fulfilling the full requirements of retirement by age or retirement by contribution time. 5

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longer linked to the minimum wage; and, in general, the nominal ceiling of benefits was lowered (Brasil, 1998). With the final text approved, there were two alternatives: retirement “by age”—65 years for men and 60 years for women, with a minimum contribution requirement of 15  years—and retirement “by contribution time”—being 35/30 years for men and women with a minimum age of 53/48 years, respectively. In this case, until the taxpayer reached 65/60 years of age, what applied was the so-called “social security factor”10, created later in 1999, and whose calculation, in simple terms, resulted in the reduction of a significant portion of the value of the benefit, encouraging the postponement of retirement. Over the 3 years of discussions and processing of this first reform, the diagnosis in the field of orthodox economics was that the main issue of social security was that its rules were generating an increase in the INSS/GDP ratio, which had become the largest item in the national budget at the end of the 1990s (Giambiagi et al., 2004). In the same way that the macroeconomic strategy then underway aimed at reducing the public sector/GDP net debt ratio, the proponents of the reforms argued that “society should agree to prevent social security expenditure as a proportion of GDP from continuing to increase systematically, as it has over the last few years” (Giambiagi et al., 2004, p. 366). In addition to the GDP effect, two other factors would be the main generators of imbalances in social security: (1) the so-called “MW effect” since, as most benefits were linked to the minimum wage, the increase in this variable pressured this component of state spending upwards; and (2) an alleged “benevolence of legislation” that allowed “early” retirements by contribution time, a modality that was more expensive to the system’s coffers. From the point of view of the civil service pension system, the reform approved the unification of the rules applied to the three levels of government, which represented a profound change that “disconnected social security benefits from government careers, allowing for the actuarial imbalance of the public sector’s own regime to be highlighted” (Fleury & Alves, 2004, p. 995). It strengthened the idea that the alternative to these imbalances was in creating a supplementary pension system through pension funds. This would be the next step of the dismantling operated by the new federal government.

2.2 The 2003 Dismantling: The Reform of the Public Service Pension System The government of Luiz Inácio Lula da Silva, which began in 2003, was marked by complex and often contradictory movements. Right off, one of its first measures was to carry out a new pension reform, leveling the Pension Regime for Government

 The social security factor was an index used to compose the calculation of the INSS retirement value. When calculating the benefit, the worker’s average salary was multiplied by the factor corresponding to their age and time of contribution at the time of retirement. 10

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Workers (RPPs) with the General Social Security Regime (RGPS, which covers private sector workers)—something that the former opposition to previous governments and to the 1998 reform, an opposition of which the Workers’ Party (PT) itself had been part, had managed to halt in the previous reform. At the same time that constitutional amendment No. 41 of 2003 turned its attention to RPPs, its defenders in the government reaffirmed the distribution regime, arguing that they were opposed to the costly transition to a capitalization regime. They also highlighted that the policy of subsidies to rural pensions was necessary to fight poverty in the country, in addition to pointing out that the possible problems of financing the RGPS could be dealt with through better management—such as fighting tax evasion and giving incentives to formalize jobs, increasing the system’s ability to collect. Despite this, since the electoral campaign, above all in the now famous 2002 Letter to the Brazilian People, Lula and his party began to carry out a set of actions in order to keep communication channels open with sectors linked to the neoliberalizing agenda, reaching out to the so-called financial actors. These were no longer restricted to the portions of society’s rentier and patrimonial elite but began to include unionists and former unionists with links to this sphere of capital appreciation (Jardim, 2009). The dispute over the resignification of this sphere of the market was one of the displacements operated by the new government, with profound implications in the realm of private pensions, in particular, the role of pension funds for national capitalism. This notion went back to internal discussions had by the unions and by the party itself about the role that workers’ representatives should be playing in the face of the profound changes global capitalism had been undergoing since the 1980s. Since 1996, when the Brazilian National Association of Closed Pension Funds11 (Abrapp) met at the ABC Metalworkers Union, important names of the Workers’ Party (PT) that would join the government from 2003 onward, such as Aloizio Mercadante, Luiz Gushiken, and Ricardo Berzoini12, were among those who defended large pension funds as “democratic instruments for managing workers’ savings” (Jardim, 2009, p. 146). In an interview with the newspaper Folha de São Paulo in 2003, President Lula publicly took this stand declaring that “it is not all about 1%, 2%, 10% salary increase (…) I am convinced that the Brazilian trade union movement has to (…) extrapolate the limits of unionism” (Folha de São Paulo, 07/30/2003 apud Jardim, 2009, p. 417). Opposing the new reform proposal, the National Association of Tax Auditors of the Brazilian Federal Revenue Service (ANFIP) took on a leading role in questioning the Ministry of Social Security, pointing out that, based on data from its system, if diversions of security funds for other purposes were disregarded—a practice that had grown with mechanisms created in the 1990s, such as the Earmarked Lifting of Social Security Resources (Desvinculação das Receitas da União  - DRU)—there would be no deficit, but rather a surplus in social security. This debate continues to  ABRAPP—Brazilian National Association of Closed Pension Funds is a non-profit entity that represents the common interests of Closed Supplementary Pension Entities. 12  Then president of the Union of Bankers of São Paulo, who would eventually become minister of Social Security in the new government. 11

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present, since several analysts point out that the number of exemptions and diversions of funds constitutionally destined for social security are largely responsible for the alleged deficit mentioned in official statements, configuring a “creative accounting” for social security (Gentil, 2006; Fagnani, 2008). Fleury and Alves (2004) point out that discussions and negotiations between government and civil society actors in new institutional spaces, such as the Economic and Social Development Council (CDES), and the meetings between governors that resulted in the Brasília Charter13 (2003), were fundamental to explain how the Lula government managed to approve measures widely rejected in the context of the previous pension reform. In the negotiation with CDES members, state governors and, finally, with the Judiciary, agreements were established that enabled a common ceiling between RPPs and RGPS for employees who started their careers after the reform’s approval. Generally speaking, the new law ended the integrality of employee pensions, introducing a retirement ceiling of R$2400 at the time (considering that above this amount a 30% cut was made on the surplus); established the parity between active and inactive workers; and approved a contribution rate of 11% for retired employees. By leveling out RPPs and RGPS, the second reform of the new democratic period paved the way for closed supplementary pension structures—the so-called pension funds—to be strengthened. Under the new rule, a civil servant who earned above the RGPS ceiling and opted for a supplementary pension could join the Supplementary Pension Foundation for Federal Public Servants (Funpresp),14 receiving matching contributions from the government. The measure was part of an effort to “domesticate or moralize capital” through the intervention of unions, that is, with the genuine representatives of workers managing pension funds. Strengthening the supplementary pension system of civil servants would “compensate” for the reduction of pensions resulting from the reform while at the same time generating funds to be invested in financial operations—and therefore made available to finance the national productive sector. This is how, for 10 years, from 2004 to 2014, the largest pension funds in the country—Previ (Banco do Brasil), Petros (Petrobras), and Funcef (Caixa Econômica Federal)—whose origin is linked to public or mixed economy companies, directed most of their investments to dynamize the national banking financial sector and to finance productive sectors considered strategic for the growth efforts of the national economy. Faced with the international dynamics of growth in the commodities market—the so-called “China effect”—the private sectors created from the privatizations of the previous period were strengthened, with special emphasis on mining, oil and petrochemicals, electricity, and transport infrastructure. In addition, these funds boosted the establishment of powerful national conglomerates such as Ambev, BRF, and JBS, in the food and beverage sector.  And agreement signed between the federal government and the states on social security and tax issues. 14  However, Funpresp, was only regulated in President Dilma Rousseff’s first term, in 2012, with the clear goal of becoming the largest pension fund in Latin America—a goal not yet realized. 13

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The effects of the 2008 global crisis and the resulting changes in the international economic environment would later on take its toll on this direct link. Gradually, it would become evident that the features of the “developmental experiment” spearheaded by the large Brazilian pension funds, did not represent a lengthening of the economy’s financing bases for diversification of the national production chain. Rather, it reinforced the dependent profile of Brazilian accumulation in relation to foreign markets and to the exploitation of its natural resources. Thus, since 2014, a series of internal and external structural constraints15 drove Brazil, from 2016, toward a new neoliberal agenda associated with the rise of conservative political and social forces, and openly authoritarian traits. In this context, a new and deeply de-­ constitutionalizing proposal for pension reform was presented to National Congress while the country was still under Michel Temer’s government. Entirely aligned with the financial market lobby inside the Temer administration, Constitutional Amendment Proposal No. 287/2016 (PEC 287/2016) again brought the same draconian arguments about the actuarial unsustainability of social security, aiming directly at uncoupling benefits from the national minimum wage, and proposing rules of age and increase in the time of contribution of workers that would practically invalidate this type of retirement in the country, or at least in states with a lower life expectancy. It can be said that the presidency only failed to approve the reform at that moment because the unpopularity of the measures would have been too high a price to be paid by the senators and deputies who intended to be re-­ elected in the following elections, and therefore, the government did not get enough support to put it to a vote. This scenario, however, would change tragically starting in the 2018 elections with the change in the decision-making arena. From this point on, along the lines of the theories proposed by Bauer and Knill (2014), the calculation of how to weigh the costs and benefits of dismantling the social security policy changes.

2.3 The 2016–2019 Dismantling: The Third Pension Reform From a point of view of resistance to the most recent reform—which was first discussed in 2016 and approved in 2019—the main actors involved in demonstrating an opposing view in social media and across the country’s streets were the same ones who had already tried, unsuccessfully, to rally popular support to stop the parliamentary-juridical-media coup that removed President Dilma Rousseff from power. In addition to the PT and allied leftist parties, this front line was formed by  Stemming from political factors such as the messianism of the Brazilian judiciary regarding the fight against corruption—as manifested in Operation Car Wash—and the intensification of the distributive conflict in a context of economic crisis—within which sociological interpretations point out that a discontented middle class shifted to the conservative political field—the fall of President Dilma Rousseff’s government meant the rise of an austerity agenda openly committed to carrying out reforms. 15

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the previously mentioned ANFIP, DIEESE, 16 the Citizen Public Debt Audit, central trade unions, and member organizations of the People Without Fear Front and the Brazil Popular Front. However, in the same way that grassroots movements were weakened by the economic crisis since 2014, with the middle class migrating to conservatism and making it impossible for the government to defend itself against the illegitimate impeachment process, opposition to pension reform only managed to stop the blatant constitutional setbacks contained in the original draft of 2016’s PEC 287, unable to hold back the parametric changes finally approved in Congress and sanctioned by the presidency. Faced with the deepest economic crisis in Brazilian history until that point, with the escalation of unemployment rates and a strong anti-politics discourse fed by various sectors of society, the country elected a government that was conservative from a social standpoint and profoundly (neo)liberal—or ultraneoliberal—from an economic one, under the leadership of Jair Bolsonaro, who managed to impose his perspective of austerity by resuming the pension reform agenda. In 2019, the approval of the proposal in the form of constitutional amendment No. 103—which eliminated retirement by contribution time and raised the minimum ages and requirements for granting social security benefits—meant the predominance of a strictly fiscalist notion of pensions and the return of active strategies for dismantling social security. In analyzing the context of the approval of the 2019 reform, we can observe that the increase in unemployment from 2014 onward may have been one of the factors preventing workers from mobilizing against the pension reform, since the perspective of accessing this right began to seem increasingly distant. If, on the one hand, the growth of informality in the labor market meant that these workers did not fall into immediate poverty, on the other hand, this extremely worrying fact denotes increased precariousness in working conditions, with the reduction of coverage linked to the rights guaranteed by social security. According to the Brazilian Institute of Geography and Statistics’ (IBGE) Summary of Social Indicators (2019), in 2018, 38.3 million people, or 41.5% of the country’s employed population, worked in one of the following five modalities of informal work: private sector employees and domestic workers without a signed work record booklet; self-employed workers or employers who do not contribute to social security; and/or auxiliary family workers [who work for no pay helping a family member carry out their economic activity] (IBGE, 2019, pp. 18–19). Thus, the reduction of social security revenues due to the high rate of informality, especially in the face of crisis situations such as the current one, strengthened the arguments of reform supporters, and may have contributed to the false narrative that social security was “a right for a few.” Therefore, while unions were progressively weakened—especially with the end of the compulsory union contribution—the historically non-contributory social groups, too politically weakened and fragmented to organize in the defense of a solidary social security, in

16

 Inter-Union Department of Statistics and Socioeconomic Studies (DIEESE).

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the original molds of the 1988 Federal Constitution, removed themselves from the debate.

2.4 The Redistributive Importance of Social Security The progressive dismantling of the Brazilian pension system ignores that the RGPS is the main governmental mechanism for fighting regional inequalities, in addition to it playing a crucial role in the economies of most of the country’s municipalities at a moment when strengthening pensions and benefits could have an immense potential in mitigating the consequences of the economic crisis at a local and regional level. And all of this, outside of the realm of “astronomical” pensions or benefits. According to data from the Social Security Statistical Bulletin (Sprev, 2019), the ceiling of benefits paid by the RGPS in 2019 reached R$6.101 (~USD1,548 as per the average annual dollar rate), even though most benefits were concentrated at approximately one minimum wage. Figure 5.1 shows the distribution of the amount of urban and rural benefits issued by RGPS in 2019, when the last reform was approved, by income brackets based on the minimum wage. According to these data, practically the entire rural population covered by the RGPS receives around a minimum wage, with the other 2% of this group divided into the adjacent income brackets. This means that the retired rural worker or INSS beneficiary in Brazil earned, on average, just over R$1000 reais17 per month, reaching a maximum income of R$2000 reais18 if they were part of the 1% with the highest income. Considering the historical features that characterize rural life in Brazil, it can be said that social security today guarantees the maintenance of a minimum level of subsistence for the elderly in rural areas of the country, being the main factor of protection against poverty in the countryside. The urban clientele, on the other hand, despite the average income guaranteed by the RGPS doubling in relation to the countryside for about 23% of beneficiaries, its general level does not change much, as shown in Fig. 5.1, with more than half of the RGPS’ urban beneficiaries (52%) located in the benefits range of approximately one minimum wage—that is, earning the same R$1000 per month as most rural beneficiaries. In total, 75% of the INSS’ urban clientele earned a maximum of two minimum wages—or about R$2000, in 2019 values. In this sense, it is difficult to think that these funds can be committed to the accumulation of capital, making INSS retirees a “privileged” class in terms of monetary income. Income brackets above two minimum wages are simply inexistent for the rural clientele, and represent 22%, or less than one-third, of the total RGPS urban benefits. By way of comparison, according to data from the annual Continuous National Household Sample Survey (PNAD) from 2012 to 2017 (Hoffman et al., 2018), the

17 18

 The equivalent to USD240 in 2019.  The equivalent to USD480 in 2019.

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Urban

0

>5

Income brackets (in MW)

121

0

4-5

0

3-4

0

2-3

1

1-2

98

1 1