Louis Proyect: The Unrepentant Marxist

July 31, 2008

Irrational Exuberance

Filed under: economics,imperialism/globalization — louisproyect @ 2:26 pm

Wall Street Journal, April 14, 1972
Turnabout Nation
Brazil’s Economy Goes from Mess to Miracle, Grows Over 11% in Year

By Everett G. Martin

Rio de Janeiro-“In 10 years, Brazil will be one of the five great powers of the world.”

The Brazilian banker’s prediction may sound pretty exuberant. But businessmen all over this massive country exude such confidence these days-and not without reason. Brazil, once a monumental economic mess, now is staging an economic miracle. Indeed, some economists think the country may have a thing or two to teach the United States, especially about stimulating growth while sort of controlling inflation.

In the past four years, Brazil has sustained a steady real growth, excluding inflationary distortions, that averaged a staggering 9.8% a year. Last year, the rate reached 11.3%-one of the highest in the world. (In contrast, the U.S. growth rate last year was 2.6%. Due to a slowdown, even the normally high-flying Japanese economy grew only about 4.5% last year; it is expected to expand about 8.5% this year.) Partly through vigorous use of tax incentives and other measures, this nation of 95 million may achieve growth rates averaging 8% or 9% for years to come, both Brazilian and foreign economists predict.

Today, bustling Brazilian factories export watches to Switzerland, precision instruments to West Germany, shoes to Italy and computer parts to the U.S. The nation’s auto plants now use all Brazilian-made parts and produce 500,000 cars a year-double the level of five years ago. Ford Motor Co. is building a Brazilian plant that is expected to export 200,000 engines a year for the company’s American-made Pinto model. Soon, then, Americans will be driving cars with Brazilian engines.


Sydney Morning Herald (Australia), November 21, 1988
Brazil Declines into Grim Despair

ON the rare occasions that Brazil’s President, Mr Jose Sarney, appears in public these days, it is usually at a military function, and he is normally flanked by the Ministers of the Army, Navy and Air Force. Mr Sarney was a longtime ally of the military when, in 1985, he became the country’s first civilian ruler in 21 years. But now he has more immediate reasons to keep close company with his generals. His popularity has collapsed, his Government appears increasingly unable to deal with the multiple crises strangling Brazil and growing discontent among workers and the urban poor is threatening the country’s internal stability and rocking the confidence of its external creditors. Two weeks ago, soldiers killed several workers while evicting 12,000 strikers from a State-owned steel mill. In last week’s local elections, leftist candidates swept to power in Sao Paulo and Rio de Janeiro.

Despite the once-confident boast of the country having achieved an economic miracle, Brazil today is an exaggerated version of Latin America’s economic malaise. The country is saddled with an international debt in excess of $US100 billion ($A116 billion). A quarter of its workforce is unemployed, inflation could reach 1,000 per cent for this year and purchasing power has declined by 40 per cent over the past two years. Three years into the “New Republic” under President Sarney, Brazil’s Government appears tired to the point of inertia. Unable to juggle the demands of its constituents and its creditors, the Government has ceded responsibilities to other powerful interest groups. It added its signature to a recent tripartite social pact on prices-and-wages control. But the package was initiated by the private sector and engineered by business and union leaders.

The Government’s inability to deal with the country’s economic collapse, together with widespread allegations of corruption by officials, has led to a disenchantment with President Sarney and doubts about the prospects for Brazil’s fragile democracy. A new Constitution was presented in October and elections for the presidency are due to be held next year. But pessimism has fuelled rumours of a coup and an ominous, if not yet overpowering, resignation about a return to the rule of the generals.


NY Times, July 31, 2008
Strong Economy Propels Brazil to World Stage
By Alexei Barrionuevo

Fortaleza – Desperate to escape her hand-to-mouth existence in one of Brazil’s poorest regions, Maria Benedita Sousa used a small loan five years ago to buy two sewing machines and start her own business making women’s underwear.

Today Ms. Sousa, a mother of three who started out working in a jeans factory making minimum wage, employs 25 people in a modest two-room factory that produces 55,000 pairs of cotton underwear a month. She bought and renovated a house for her family and is now thinking of buying a second car. Her daughter, who is studying to be a pharmacist, could be the first family member to finish college.

“You can’t imagine the happiness I am feeling,” Ms. Sousa, 43, said from the floor of her business, Big Mateus, named after a son. “I am someone who came from the countryside to the city. I battled and battled, and today my children are studying, with one in college and two others in school. It’s a gift from God.”

Today her country is lifting itself up in much the same way. Brazil, South America’s largest economy, is finally poised to realize its long-anticipated potential as a global player, economists say, as the country rides its biggest economic expansion in three decades.

Full: http://www.nytimes.com/2008/07/31/world/americas/31brazil.html


  1. This is very interesting. The same story is happening in India. You can’t open a corporate Newspaper without coming across bragging by elite intellectuals, journalists about how great India is becoming. For them, It is only a matter of time India becomes a Great Power. There are any number of articles touting the great economic miracle of India and celebrating Globalization, Neoliberalism, Free Markets.

    Sooner or later this will go belly up. That would be even better for these apologists. They would demand even greater “Reforms” which would again put India on track to become “Great Power”.

    You would be surprised to read some downright bizarre commentaries by Indian hacks outlining how USA will help India become Great Power. Yes, according to these fools US will “help” some other country to become Great Power. It is so touching.

    Comment by Ajit — July 31, 2008 @ 5:26 pm

  2. Loius, it is fascinating that you pulled these thrash out of the dustbin of economy columns and combined together to show that, I suppose, every economic analysis solely based on numbers, economic indicators, etc. but irrelevant with the real conditions of real people is encumbered with ideological knavery or wishful fantasies of myth-making at best. As regards to the myth making process, the social “reality” always gives answers to our questions (as in this case, with the reliable analytic authority of the economic indicators) but they are commonly delusive outlets from the monstrous truths about the social order. Whenever an ordinary man is keen on to convince himself that finally the period of economic catastrophes is over and everything is going smoothly and will continue to improve in the future, a bunch of indicators are often ready to reply him and approve his fancy.

    Comment by Mehmet Cagatay — July 31, 2008 @ 8:19 pm

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