The end of the commodity boom and a growing sentiment of economic insecurity gave the PT’s detractors the opportunity to rally opposition against the regime. Much of this opposition revolved around the issue of corruption, which was widespread, including among PT politicians. However, corruption, as I point out in an earlier post, is, among other things, a symptom of the lack of a political settlement insofar as it secures the quiescence of an otherwise recalcitrant private sector.
For the commodity boom/social democratic years to have had an enduring positive impact on social welfare, a cross-societal consensus on the regime’s social justice goals was necessary. Business and middle class groups, and more privileged sectors of the working class, would have to make redistributive concessions. A strategy for employment generation in (new) productive activities was also required—not something that a business class so closely attuned to neoliberalism was likely to give strong support to. While it is certainly true that even had there been a redistributive settlement the commodity downturn would have created political difficulties for the regime, the consequences would not likely have been as dire as they currently are.
The Commodity Boom made a Redistributive Settlement and Structural Transformation Unnecessary
The commodity boom insulated the PT regime from the necessity of a redistributive settlement and basic changes in productive structure. Indeed, Brazil and other Latin American countries became ever more dependent on commodity exports as a consequence of the recent boom. Tough discussions about tax reform and other redistributive measures could be avoided. Interventionist measures encouraging investment and export diversification could also be sidestepped, an almost necessary choice given the private sector’s aversion to state intervention in the economy. Meanwhile, the boom did make available the resources for expanded government spending on social programs—but this was only a viable strategy for social improvement while the commodity boom lasted.
