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Accumulation Regimes, Labour Market and Inequality: the Brazilian Case in a Long-Term Perspective

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Accumulation Regimes, Labour Market and Inequality: the Brazilian Case in a Long-Term Perspective Accumulation Regimes, Labour Market and Inequality: The Brazilian Case in a Long-term Perspective By ALexandre de Freitas Barbosa and Maria Cristina Cacciamali Project Paper C (Brazil) May, 2014 Working Paper IDRC Project number 106919-002 (Institute for Human Development, New Delhi, India) IDRC Project number 106919-001 (Cebrap, Sao Paulo, Brazil) IDRC Project title: Labour Market Inequality in Brazil and India Institute for Human Development, NIDM Building, IIPA Campus, IP Estate, New Delhi 110002 Centro Brasileiro Análise Planejamento Cebrap, R. Morgado de Mateus, 615, São Paulo - SP, 04015-051, Brazil Contact: [email protected]; [email protected]; [email protected] This report is presented as received from project recipent(s). It has not been subjected to peer review or other review processes. This work is used with the permission of Institute for Human Development/Cebrap, New Delhi/Sao Paulo. Copyright 2014, Institute for Human Development/Cebrap. Abstract The aim of this paper is three-fold. First, we seek to delve into the main characteristics of accumulation regimes, labor market and inequality in Brazilian history, taking a long-term perspective and showing how these dimensions are mutually reinforcing. Secondly, in other to develop this analytical framework, two periods were chosen – 1940-1980 and 1980-2010 – which should not be considered as monolithic. Different accumulation regimes – even though not complete ones –; labor market trends and inequality patterns can be found in each of these periods. Thirdly, even though the paper is cut down in two different parts (one for each period and with a similar structure), it is our intention to grasp continuities and ruptures between them. If, on the one hand, the present is scrutinized through the lens of the past, it is our purpose also, by capturing the new aspects of Brazilian society in the first decade of the 20th century, to shed light on some possible avenues for the near future. Finally, this paper tries to combine description of the mains trends with an analytical approach to address how, in the different periods, the political and social context, intertwined with the macroeconomic dynamics and the larger international setting, brought about specific labor market configurations and social outcomes in Brazil. 1 Keywords: industrialisation, growth, labour market institutions, state policies, social mobility. 2 Annex 7 Accumulation Regimes, Labour Market and Inequality: The Brazilian Experience in the Long-Term Brazilian Paper C Preliminary Version May 2014 Introduction The aim of this paper is three-fold. First, we seek to delve into the main characteristics of accumulation regimes, labor market and inequality in Brazilian history, taking a long-term perspective and showing how these dimensions are mutually reinforcing. Secondly, in other to develop this analytical framework, two periods were chosen – 1940-1980 and 1980-2010 – which should not be considered as monolithic. Different accumulation regimes – even though not complete ones –; labor market trends and inequality patterns can be found in each of these periods. Thirdly, even though the paper is cut down in two different parts (one for each period and with a similar structure), it is our intention to grasp continuities and ruptures between them. If, on the one hand, the present is scrutinized through the lens of the past, it is our purpose also, by capturing the new aspects of Brazilian society in the first decade of the 20th century, to shed light on some possible avenues for the near future. Two points need to be stressed. The paper is still a preliminary one, as it requires bridges to be established among the findings for each period, in order to highlight the new trends, how they came about and which were the driving forces behind the fall of inequality in Brazil during the recent period. It should also allow for comparisons with the Indian case, as one of the tasks of the project is to dig into the patterns of inequality that arose due to particular political, social and economic structures, leading to distinct development trajectories in these two countries. Finally, this paper tries to combine description of the mains trends with an analytical approach. That is, to address how, in the different periods, the political and social context, intertwined with the macroeconomic dynamics and the larger international setting, brought about specific labor market configurations and social outcomes in Brazil. These will be looked at in depth on paper D, when inequality in the labor market and its different dimensions – for the 1990s and the years 2000 – should be the main focus of the research. 3 1. Industrialization, Growth, and Inequality: Brazil from 1930 to1980 This first part of the text is divided into five topics. First we provide a broader picture of the political and social milestones that marked Brazil between 1930 and 1980, before providing an interpretation of the characteristics of the economic dynamic, building on an attempt at historical periodization. The third topic analyzes the key labor policies and institutional structure set in place in the country during this period. The fourth and fifth topics seek to develop how the combination of political context, economic dynamics, and labor-related institutions impacted on the structure and functioning of the labor market, as well as on social mobility and the income inequality profile. 1.1. The Political and Social Context from 1930 to 1980 Over this period, Brazil’s historical trajectory had an inflection point. In order to understand this statement, we start with a brief review of what Brazil was before 1930. Next, we present the political changes that took place during this period, which do not have an inexorable logic, as they are agents and outcomes of broader social and economic processes. Our aim is to outline how the power structure has shifted and what role it plays in the creation of new public institutions and policies marked, to a great extent, by a high dose of state apparatus centralization. Finally, we return to the social dynamic that accompanies and influences these political transformations, yet does not necessarily set the results of the broader development trajectory. Historical Background For an understanding of contemporary Brazil, our point of departure should be that this “is the history of a colony that became a nation”. The statement by historian Fernando Novais (2011) builds on the contribution by Caio Prado Jr. (1942), whose seminal work pointed to “the meaning of colonization” as the key to unveiling the past. The entire intellectual production by Caio Prado Jr., who founded a style of thought on the Brazilian historical experience, is in search of dialectic between the colony and the nation, which has to emerge therefrom, that is, has to overcome the former condition. To Caio Prado Jr., the role of exporting agent to Europe, on the basis of a slave labor force predominantly on large plantations, would compromise the prospects of economic development with a minimum of productive and social diversification. Secondary variants would emerge: subsistence agriculture, a craft-based industry, and, foremost, political independence, even if this did not pose an immediate threat to the colonial system. In short, to Caio Prado Jr., colonial Brazil was embedded in the broader capitalist system, building on its own economic and social institutions, which were equidistant from both the capitalist and feudal patterns. If slave labor was predominant and absorbing, standing out in most regions and economic activities, including in the cities, an increasingly more significant social group, not owning slaves and properties, composed of the so-called “poor free men”, was coming to the fore. They performed complementary activities in the cities and rural areas, abiding by the tenets of an 4 essentially patriarchal society that was controlled by a small elite of land and slave owners. Therefore, their freedom was just relative, as they did not act “freely” in a small-scale market, basically dependent on favors. Thus, the slave system – construed as a colonial productive system founded on slavery and integrated into the world economy (Alencastro, 2000) – engenders a specific slavery-based society, where slaveholding defines one’s position in the social hierarchy (Schwartz, 1995). A specific type of inequality emerges in this society, one that is not related to the functioning of a dynamic market where class positions are distributed on the basis of one’s attributes. Indeed, it is about “a dual-structure social body” (Mattoso, 1990), with a variety of slave conditions and distinct spaces for poor free men to rise, varying from region to region. Although Independence did not alter the key components of the colonial system, it brought with it new realities, and with them, structural transformations. Now there was an internalized State that set in motion a new flow of domestic income, boosted by the new English connection that would displace the Portuguese business community and invest heavily in, mostly, infrastructure. In the words of Florestan Fernandes (1987), especially after 1850, when trade slave ceases and the cities start to generate part of the capital, a new interplay with the agricultural economy is being processed, while some investments are drained out of the slave circuit. That is, a change in the international setting, coupled with the gestation of a new elite at home (the former slaveholder becomes “master citizen”, i.e., active in the political sphere), gave rise to a broad yet satellized array of market mechanisms. The outcome is ascending mobility restricted to privileged groups in the city and in some regions of the country with highly-valued agricultural commodities on the international market. This is the “transition to the age of national society”, whose development, however, is neither spontaneous nor endogenous. Economic dynamism– we are still not speaking of a self-reliant domestic market or of social interests over and beyond the landowning political elites –is not the outcome of a process of diversification of the previously existing productive system.
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