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Why is the defense of democracy insufficient?

The Latinobarómetro 2021, the most important measurement of satisfaction with democracy in Latin America, revealed widespread dissatisfaction among the population. The report shows that in the region there is widespread dissatisfaction with the performance of the political elites (70% are dissatisfied with the current management of their country). Only 22% of respondents say that their leaders care about others, and only 17% believe that the distribution of wealth in their countries is fair. The survey also highlighted Brazil’s democratic deterioration under the presidency of Jair Bolsonaro.

Faced with threats of coups by Bolsonaro and his supporters, different sectors of society have publicly spoken out in defense of Brazilian democracy, even pointing in the direction of a referendum vote as early as the first round of the October presidential elections. Although important and necessary, this is a defensive agenda, limited to the contours of a public debate that is ultimately guided by Bolsonaro’s destructive agenda.

It is a defense of democracy that does not show itself capable of dialoguing with the population’s desire for profound changes in the country and is incapable of unmasking the anti-systemic farce of Bolsonarism. And why? Because, simply, it does not affect those who, in fact, concentrate power and hijack any possibility of change in favor of the majorities. That is, the financial oligarchy that drains ever larger portions of the population’s income, and, more recently, making use of Bolsonaro’s ultra-liberal policies.

Not by chance, these oligarchs, supporters of Bolsonaro’s government, are also today signatories of manifestos and public pronouncements in favor of democracy. In the current debate, between democrats and bolsonaristas, the financial oligarchs are not only safe, but are often protagonists. For this reason, the defense of democracy, without questioning the rampant growth of the power of such oligarchs, runs the risk of turning out, like Bolsonaro’s anti-systemic defense, to be a farce.

It is not just a matter of holding the local financial oligarchy accountable or of remembering that, according to Oxfam’s 2017 report “The Distance that Unites Us”, six Brazilians have wealth equivalent to the total wealth of the 100 million poorest people in the country and that the richest 5% have the same share of income as the remaining 95%.

Globally, in the two decades of the 21st century, financial dominance within the capitalist system has been acquiring an unprecedented magnitude, something that accelerated in the post-2008 crisis. In fact, a 2021 report by the Financial Stability Board, created by the G20 to oversee the international financial system in the post-crisis period, reveals that the total value of global financial assets grew from $230 trillion in 2009 to over $400 trillion in 2019, reaching almost five times the global GDP that year.

Considered by more or less orthodox liberals as merely an excess or a failure of the market, this rentier-financial logic has also dominated the dynamics of our peripheral capitalism and has led to an increase in the concentration of property and income. A recent study by FONACATE shows that, in Brazil, in 2020, for every 1 Brazilian real allocated to investment or gross capital formation, there are more than 6 reais invested in financial assets (public or private debt securities, company shares, exchange contracts and commodities).

The economy and financial sector must be democratized.

But where do financial agents extract their enormous profitability? In 2021, 60% of the total stock of financial assets in Brazil was invested in public debt bonds. This is something that undoubtedly explains why we have the highest real interest rate in the world economy, the so-called autonomy of the Central Bank and the strangulation of social spending with the so-called “spending ceiling.” An assault on public savings accompanied by an insecurity of rights.

On the other hand, these same financial agents seek to advance their “investments” in social policies (social security, health, education, energy and sanitation). In the privatization of the State Water and Sewage Company of Rio de Janeiro (CEDAE), which took place in April 2021, the big winner of the auction was Águas do Rio, which belongs to AEGEA. This organization is, in turn,  controlled by financial institutions, such as Banco Itaú and the Sovereign Fund of Singapore.

With the recent privatization of Eletrobras, the largest private controller of the company became 3G Capital, which is owned by Jorge Paulo Lemann, the wealthiest person in Brazil, according to Forbes. There will be no better way to support financial profitability than by accessing public services with tariffs, and also capturing labor income.

This financial and speculative logic, which has its privileged operators in the large banks and investment funds, also rules today in the large private, non-financial groups that have financial institutions in their corporate structure. This is the case of the mining company Vale, which has Banco Bradesco as one of its controllers. Thus, large companies allocate a significant part of their profits to the payment of dividends to their shareholders, to the repurchase of their own shares and to financial investments.

This behavior discourages productive investment and changes management practices in favor of financial allocation and profitability, resulting in pressure from shareholders and the owner who push for maximum extraction of value from labor and the plundering of nature. Hence the legalization of casual, unsecure work by Michel Temer’s labor reform, and the daily pressures to degrade environmental and indigenous rights.

On top of incomes that are compressed, and representation that is increasingly in the hands of the private sector, the majority of the population is also shackled to indebtedness, which reaches more than 77% of Brazilian families. These debts even more so feed more the usurious and speculative predation of the rentiers.

The financial oligarchs, which today pretend to be democrats, are the same ones that operate and benefit from the macroeconomic, fiscal, social security, labor, and privatization policies of the last governments. These are the true machines for crushing the people.

Before Brazil’s independence, there were the so-called “good men.” That is, large landowners and people in charge of local administration. After 200 years, will we continue to be hostages of a financial caste, of “new good men” who are simultaneously unaccountable and untouchable, but in charge of the whole Republic?

Translated from Spanish by Alek Langford


Cientista Político. Profesor de la Univ. Federal del Estado de Rio de Janeiro (UNIRIO) y de la Pontifícia Universidad Católica de Rio de Janeiro. Coordinador del Instituto Mais Democracia. Doctor por IUPERJ (actual IESP/UERJ)


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