4. Securing the Victory

The United States was the "regime's most reliable ally," Thomas Skidmore observes in the most comprehensive scholarly study of what came next. US aid "saved the day" for the ruling Generals; the process also "turned the U.S. into a kind of unilateral IMF, overseeing every aspect of Brazilian economic policy." "In almost every Brazilian office involved in administering unpopular tax, wage, or price decisions, there was the ubiquitous American adviser," the new US Ambassador discovered in 1966. Once again, the US was well-positioned to use Brazil as a "testing area for modern scientific methods of industrial development" (Haines), and therefore has every right to take credit for what ensued. Under US guidance, Brazil pursued orthodox neoliberal policies, "doing everything right" by monetarist criteria, and "strengthening the market economy" (Skidmore). The "economic miracle" proceeded in parallel with the entrenchment of the fascist National Security State, not accidentally; a regime that could not wield the knout could hardly have carried out measures with such a deleterious impact on the population.

The neoliberal reforms did not exactly succeed in "building Brazilian capitalism," Skidmore continues (though they did help build foreign corporations). They provoked a severe industrial recession, driving many businesses to ruin. To counter these effects and to prevent still further foreign takeover of the economy, the government turned to the public sector, strengthening the despised state corporations.

In 1967, economic policy was taken over by technocrats led by the highly respected conservative economist Antonio Delfim Neto, an enthusiastic supporter of "the Revolution of March 31," which he saw as a "huge demonstration by society" and "the product of a collective consensus" (among those who qualify as "society"). Declaring its devotion to the principles of economic liberalism, the government instituted indefinite wage controls. "Worker protests, up to now infrequent and small, were handily suppressed," Skidmore notes, as fascist rule hardened further over the whole society, with harsh censorship, elimination of judicial independence, removal of many faculty, and revised curricula to promote patriotism. The new compulsory course in "Moral and Civic Education" aimed to "defend the democratic principle by preserving the religious spirit, the dignity of the human being, and the love of liberty, with responsibility under God's inspiration" -- as administered by the Generals with the technocrats at their side. The authors of the 1992 Republican Campaign platform would have been much impressed, along with 1980s-style "conservatives" rather generally.

The President announced in 1970 that repression would be "harsh and implacable," with no rights for "pseudo-Brazilians." Torture became "a grisly ritual, a calculated onslaught against body and soul," Skidmore writes, with such specialties as torture of children and gang rape of wives before the family. The "orgy of torture" provided "a stark warning" to anyone with the wrong thoughts. It was a "powerful instrument," that "made it even easier for Delfim and his technocrats to avoid public debate over fundamental economic and social priorities" while they "preached the virtues of the free market." The resumption of high economic growth, by these means, made Brazil "again attractive to foreign private investors," who took over substantial parts of the economy. By the late 1970s, "The industries dominated by local capital in Brazil [were] the same industries where small businesses flourish in the United States"; multinationals and their local associates dominated the more profitable growth areas, though with the changes in the global economy, about 60 percent of foreign capital was then non-US (Peter Evans).

Macroeconomic statistics continued to be satisfying, Skidmore continues, with rapid growth of GNP and foreign investment. A "dramatic" improvement in terms of trade in the early '70s also provided a shot in the arm to the Generals and technocrats. They held firm to the doctrine that "the real answer to poverty and unequal income distribution was rapid economic growth, thereby increasing the total economic pie," eliciting nods of approval in the West. A closer look shows other characteristic features of neoliberal doctrine. Growth rates in 1965-1982 under the National Security State averaged no higher than under the parliamentary governments from 1947-1964, economist David Felix observes, despite the advantages of authoritarian control the fascist neoliberals enjoyed; and the domestic savings rate hardly rose during the "miracle years" under the "right-wing consumerism" instituted by the Generals and technocrats. The domestic market was dominated by luxury goods for the rich. None of this will be unfamiliar to others subjected to the same doctrines, including North Americans during the "Reagan revolution."

Brazil became "the most rapidly growing of major overseas markets of American manufacturers," Evans observes, with high rates of return for investment, second only to Germany during the late '60s and early '70s. Meanwhile, the country became even more of a foreign-owned subsidiary. As for the population, a World Bank study in 1975 -- at the peak of the miracle years -- reported that 68 percent had less than the minimum caloric requirement for normal physical activity and that 58 percent of children suffered from malnutrition. Ministry of Health expenditures were lower than in 1965, with the expected concomitant effects.¹¹

After a visit to Brazil in 1972, Harvard political scientist Samuel Huntington urged some relaxation of the fascist terror, but with moderation: "relaxation of controls" might "have an explosive effect in which the process gets out of control," he warned. He suggested the model of Turkey or Mexican one-party rule, playing down the importance of liberal rights in comparison with the more significant values of "institutionalization" and stability.

A few years later, the bubble burst. Brazil was swept up in the global economic crisis of the '80s, particularly ruinous in Africa and Latin America. Terms of trade now rapidly declined, eliminating this crutch for those who held the purse strings and the whip. Inflation and debt raced out of control, income levels dropped substantially, many firms faced bankruptcy, and idle capacity reached 50 percent, "giving a new meaning to `stagflation'," Skidmore observes. Delfim's neoliberal growth strategy was in "total collapse," he adds. After 4 years of severe economic decline, the economy began to recover, in large part thanks to the import-substituting industrialization decried by neoliberal economic doctrine. The Generals bowed out, leaving a civilian government to administer the economic and social wreckage.

¹¹ Felix, "Financial Blowups" (ch. 4, n. 5); Evans, op. cit.; Herman, Real Terror Network, 97.