Globalization in Brazil: Poverty, Labor, and Human Rights within a Neo-Liberal Framework

By: Dylan Fermante
210015071
For: Prof. Hoosiyar
AP/HREQ 3010
July 14, 2010

Since the collapse of the Bretton Woods system in the 70s a new framework for a global economic structure has been developing. This modern structure is an evolved form of capitalism, driven by neoliberal ideologies, which has adapted to the economic and social conditions of the current day. The recent phenomenon of globalization is in essence a modern form of global hegemony and dominance that establishes control through financial domination and capital exploitation. This paper focuses on this process of domination by examining the effects of neoliberal policies and structural reforms using the nation of Brazil as the unit of analysis. As will be discussed later in this report the government of Brazil has undergone significant structural changes over the last few decades that have resulted in an economic shift towards neoliberal policies. Policies promoting free enterprise capitalism, privatization of national assets, deregulation, tax reforms, flexible interest rates, trade liberalization and reductions in public expenditure have resulted in devastating outcomes for poor and marginalized groups within Brazil. These economic reforms have reordered government priorities resulting in cuts in social spending, worsening of wage inequality, displacement of workers, intensification of national debt and the weakening of labor bargaining and the conditions for meaningful work. The argument that this paper seeks to prove is that neoliberal policies in Brazil have altered political and social structures resulting in economic imbalance and economic, social and cultural human rights infringements. In order to fully understand the impacts of globalization in Brazil it is necessary to examine the process of structural change in a historical context. The process began after the collapse of the Bretton Woods system, an international monetary regime responsible for governing currency relations among sovereign states. The collapse of this fully negotiated system led to market instability and a shift towards a neoliberal free market structure. The Brazilian government at the time “recognized that the political economy of neoliberalism had become the basis for policy in what could be identified as ‘competitor’ regions in the world economy” (Gwynne and Kay 142). Thus in order to compete in the global economy Brazil had to switch to a neoliberal policy known as the Washington Consensus. This system was in essence a form of resuscitation for Brazil’s weak economy that promoted structural adjustment via tax reform, flexible interest rates, trade liberalization, privatization, deregulation, and reductions in public spending. Import tariffs were rapidly decreased, many non-tariff borders were abolished and amendments in the constitution eliminated any differentiation in the legal status of domestic and foreign firms. These processes subjected domestic firms to intense foreign competition and resulted in a dramatic retreat of the states participation in the economy. The results of this shift were disappointing. Interest rates on money loaned to implement these processes increased dramatically leaving the country heavily indebted while the transfer of assets to foreign investors left the labor force at the mercy of global capitalist institutions. Today international financial institutions such as the IMF and the World Bank use financial leverage to control Brazil’s policies and ensure that they are in accordance with neoliberal hegemonic values. These ideals serve the needs of capital accumulation for those in power while limiting the economic and social rights of the poor. In this model economic reform comes to mean “accumulate big budget surpluses and don’t spend them even if large numbers of people in your country are going hungry” (George 5). With Brazil’s free market system subsidies have been eliminated which means less access to basic food stuffs, energy and transportation. Cost recovery practices equal people paying more for health care and education while property rights seldom apply to the informal sector where they are most needed (George 5). Overall neoliberal trade reforms have not improved Brazil’s high levels of poverty nor have they caused greater wealth distribution. The current state of Brazil is characterized by heavy debt, intense inequality, and reduced government interaction within the economy. Brazil’s current economic situation can be critiqued from different perspectives which will now be addressed. Keeping on track with the historical context we can go even further back to the origins of colonialism in Brazil by examining the country’s current economic and social state using the dependency theory. This is an important theoretical framework for critically evaluating Brazil’s contemporary foreign policy. The effects of colonialism and imperialism have left Brazil in a current state of industrialized dependency. This state “results from a new international division of labor in which the advanced countries specialize in high-tech industries while delegating production in luxury, intermediate, and traditional industries to semiperipheral countries” (Flynn 3). The economies of Brazil and other countries of the South within this model depend on consumer demand by advanced capitalist nations and the opportunity for transnational corporations to exploit the labor force of these countries. Decades of exploitative monetary lending practices by the IMF and World Bank have left Brazil heavily indebted and thus in a state of underdevelopment. Therefore the only viable option for Brazil was to deregulate trade policies and adopt a more market friendly system of government in order to attract foreign direct investment. Unfortunately “attracting capital to developing countries depends on the superexploitation of the working class” (Flynn 3). Basically in a state of desperation the state must retreat as an active participant in the market by opening its borders, deregulating trade policies and transferring ownership of the public sector to the private sector in order to attract foreign investment. Without this foreign investment the economy runs the risk of collapsing but exploitative conditions on lending allow power to rest with transnational corporations which thrive from the exploitation of the working class. This results in an erosion of positive rights affecting one’s protection against unemployment, the right to just and favorable conditions at work, the right to a reasonable limitation of working hours, and to security in the event of sickness, disability or old age. This perpetual cycle has kept Brazil in a state of dependency, affected the quality of life for most citizens and created larger gaps of inequality between the upper and lower class. This however does not have to be the case as Flynn points out: With close to a continent-size territory and population and a diversified economy, Brazil is capable of acting semiautonomously with regard to its foreign relations vis-à-vis the dominant hegemon, the United States, but continuing dependence on foreign capital and active collaboration with the imperial center circumscribe and direct the country’s actions. (3) Many contradictions exist in terms of Brazil’s neoliberal policies and the current economic state of the county. According to the liberal perspective this model is supposed to promote togetherness, cooperation and interconnectedness. In the Liberal perspective the goal is to achieve world unity through the creation of a global society that will solve all of the world’s social and economic problems. Regrettably the tenets of the Liberal perspective have not lived up to the expectations as Brazil has only suffered further social inequality. As Amann and Baer mentioned “the neoliberal regime did not resolve Brazil’s traditional social problem, its distribution of income” (951). Liberal concepts of global culture and world society promote a definition of unity that unfortunately applies only to the rich capitalist class while negating the needs of the poor which make up almost half of Brazil’s population. Claims made by supporters of the liberal perspective that neoliberal policies have decreased poverty are untrue with respect to Brazil as Gwynne and Kay state that “the strongest criticisms of the neoliberal model has been its inability to tackle poverty” (150). The unequal distribution of assets, capital, and ownership in Brazil, caused by market friendly policies, has increased social debt and decreased social services and levels of sanitary infrastructure. Brazil’s structural adjustment policies have ultimately led to an erosion of second generation rights as the country’s neediest inhabitants have been left more vulnerable than ever as a result. The contradictions of the Liberal perspective reveal the true goal of the neoliberal philosophy which is capital accumulation. All of the concepts and ideologies concerned with neoliberalism ultimately produce the conditions necessary for gross capital accumulation through the super exploitation of weaker nations, groups, and individuals.
Relating back to dependency theory, Brazil’s economy was restructured to comprise mostly of export processing zones or free trade zones in order to attract foreign investment. This transformation was meant to boost the economy by limiting tariffs and taxes and removing trade barriers in order to entice transnational investors. These newly formed trading zones resulted in the deterioration of worker’s rights as labor and environmental laws were either reduced or repealed. These conditions spelled disaster for the poor working class but for Brazilian supporters of neoliberal capitalist ideals the “increasing erosion of workers’ salaries made levels of accumulation that attracted monopolist capital possible” (Antunes 451). Transnational corporations take advantage of the vulnerability of indebted dependant nations as they seek places and people that are easily manipulated and who do not challenge the system. Brazilian workers do not have the privilege of certain labor rights that workers in the developed nations experience such as minimum wage and the right to safe working conditions. These rights are eliminated in order to lower costs and achieve maximum profits. In Brazil’s case the retreat of governmental control and opening of borders to “dominant international financial players interested only in short-term profits, is the equivalent of leaving the free fox to guard the free henhouse” (George 6). Within a global capitalist perspective it is accepted that capitalism will lead to development and produce benefits for certain privileged groups and regions while marginalizing others. In this case the area suffering the most economic hardships is Brazil’s industrial sector which is comprised of the countries working poor. Transnational corporations and advanced capitalist nations accumulate great wealth from the exploits and deterioration of the labor force in Brazil which accounts for the majority of the country’s workforce. The industrial capitalist expansion continues to be sustained “by a process of super exploitation of labor, due to the connection between low salaries, long hours and intensive work, following an industrial pattern typical of a subordinate country” (Antunes 451). The reduction of a once stable labor force and the expansion of concentrated industry have led to the destabilization of labor caused by the expansion of part time, sub-contracted or temporary labor resulting in an intensified level of structural unemployment. These economic shifts have left millions homeless, unemployed and displaced within the country. The transformation of the traditional industrialized labor force into an industry focused on export processing has led to a decrease in worker’s rights and subsistence rights. Without access to meaningful work individuals are essentially deprived of the right to subsistence and survival because of the inability to acquire the basic necessities of life such as food, shelter, and clothing. With regard to economic reform Zell states that “Policy goals should aim at maximizing political freedoms and opportunities to enjoy political rights and economic opportunities, and to live healthy lives. Thus, economic development is secondary to human development, and not the other way around” (62). In Brazil this is far from the case as economic policy reforms have led to greater inequality and the degradation of human agency. The final aspect of analysis in regard to the neo-liberalization of Brazil focuses on the increased feminization of labor and the commodification of women as a result of globalization. The import of female labor and feminization of labor is an increasingly integral factor of the new globalized economy. In Brazil neoliberal policies of privatization and deregulation have created a context where women are servants of transnational corporations and global consumerism. As Gilliam states “neoliberal policies of privatization and deregulation are really planned economic strangulation on both the micro and macro levels” (59). Women are increasingly utilized as the producers of commercial goods and wealth for capitalist nations but as producers they are most affected by the elimination of the public sector. In many nations of the South the governments use profits from the exploits of female labor and the growth of the sex industry to repay foreign debts to organizations like the IMF and World Bank. As stated by Gilliam “Poor Brazilian women have become increasingly identified as elements in a growing sex trade on a global scale” (63). She further goes on to point out the increased “marketing of Brazilian women by the Brazilian state government agencies for the purpose of enhancing tourism” (65). The commodification of women for trade as a so called body export has fed the growing market of sexual tourism in Brazil. This growing industry of sex tourism and organized prostitution depends on a combination of third world poverty and first world demand and control of women from developing nations. The deterioration of the public sector has left many women with no choice but to join the growing sex industry as they have become one of the largest sources of foreign exchange for their countries. This reflects an abuse of security rights as their rights to human integrity are violated while their bodies become transformed into property to be consumed. This paper has outlined the negative affects that neoliberal policy has had in Brazil paying particular attention to the negative implications of policy reforms and structural adjustments in the industrial sectors and among the poor working class. Structures of dependency along with a framework of inequality have been examined in order to portray the scope of social problems and human rights infringements that globalization and neoliberal political and economic shifts have caused. With regard to the Liberal perspective and free market global policy it is evident that foreign direct investment has led to prosperity for some but “has also played a role in increasing inequality” (Armijo 263). The inequality created by neoliberal policies within Brazil is symbolic of the international imbalance of power among nations of the developed North and those of the underdeveloped South.

Works Cited
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Flynn, Matthew. “Between Subimperialism and Globalization: A Case Study in the Internationalization of Brazilian Capital.” Latin American Perspectives. 34.6 (2007): 9-27. Web.
George, Susan. “Down the Great Financial Drain: How Debt and the Washington Consensus Destroy Development and Create Poverty.” Development. 50.2 (2007): 4-11. Web.
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