Alfredo Saad-FilhoNew Dawn or False Start in Brazil?The Political Economy of Lula’s Election1
This article offers a political-economy interpretationof the transformations in the Brazilian economy andsociety since 1980, concluding with the Presidentialelection of Luiz Inácio Lula da Silva in October 2002.Two main issues are considered. First, the transitionfrom rapid growth under import-substituting indus-trialisation (ISI) to persistent economic stagnationunder a new system of accumulation, deŽned as ‘new liberalism’. Second, the article considers, in thiscontext, the meaning and signiŽcance of Lula’selection.This article has four sections. The Žrst reviews theweaknesses of ISI and the reasons for its collapse.The second explains the transition to new liberalismand the main features of this system of accumulation.The third analyses Lula’s election in the light ofBrazil’s persistent economic problems, and considers
Historical Materialism, volume 11:1 (3–21)© Koninklijke Brill NV, Leiden, 2003Also available online – www.brill.nl
1 I am grateful to Sebastian Budgen for the incentive to submit this paper forHistorical Materialism, and to Sinesio Alves, Maria de Lourdes Mollo, Lecio Moraisand Bruno Saraiva for their generous comments. The usual disclaimers apply.

the potential achievements and the limits of his administration. The fourthsection summarises the article and draws the relevant conclusions. The mostimportant conclusion is that the deteriorating performance of the Brazilianeconomy in the last two decades is the outcome of a range of complex political-economy constraints. They have not been addressed systematically in thetransition to the new system of accumulation. In fact, this transition hasaggravated some of the existing constraints, and added other importantlimitations to growth. Therefore, it is unlikely that the Brazilian economy willperform well in the near future. This limitation posits difŽcult dilemmas forthe incoming administration, led by Lula’s Workers’ Party. In this context,three alternative scenarios for Lula’s administration are briey assessed.The analysis developed below is limited in two important ways. First, itfocuses primarily upon an innovative study of macroeconomic policies andconstraints, rather than emphasising the shifting alliances and movementson the ground. This is because the limits and potential achievements of thenew administration will be determined by macroeconomic constraints, morethan by any other factor. Second, it largely omits the political conflicts withinthe PT, because they have been settled through the growing hegemony of theparty’s Centre-Right.2
1. From rapid growth to economic stagnationThe Brazilian economy is the largest in Latin America, and one of the tenlargest in the world. Between 1949 (when records began) and 1980, annualGDP growth rates averaged 7.3 per cent (3.8 per cent per capita), one of thebest performances in the world. In the Žve decades following the GreatDepression, the Brazilian economy and society were transformed profoundlyand irreversibly. A poor agricultural country, specialised in coffee productionand exports, became a large, diversiŽed and relatively wealthy industrialpower, capable of exporting aircraft to the United States, durable consumergoods to China, and construction technology to the Middle East. However, these impressive achievements were not sustained. Growth falteredin the 1980s, and the economy was eventually overcome by prolongedstagnation. In the last two decades, growth rates declined to 1.8 per cent per
4 • Alfredo Saad-Filho
2 The interested reader should consult Branford 2003 and Branford and Kucinski1995, 2003.