The wear and tear of being in government

The Workers Party (known in Brazil as the PT) has won four successive presidential elections and is experiencing the natural wear and tear of such a long stay in government. Itssuccess at the polls has been overshadowed by the weak state of the economy and the two biggest corruption scandals in Brazil´s history. In the 2002 election, the PT candidate, Lula, lost in just one state, Alagoas. In the second election, he lost in the Southern states. Dilma Rousseff has now also lost in the Midwest. The PT´s majority of 61.2% of the valid votes in 2002 fell to 60.8% in 2006, 56.1% in 2010 and 51.6% in 2014. Rousseff resorted to an infamous electoral campaign to win by such a slim margin.

The idea that the PT represents ethics in politics has fizzled out. The party´s sympathy rating of 34% in August 2002 has fallen to its current level of 21%, according to survey carried out by the Ibope institute (O Estado de S. Paulo, newspaper of 18/5/2014). It shrank from 27% to 17% among young people aged up to 24 and has dived from 41% to a mere 11% over the last 20 years among those who earn more than five minimum wages. Ibope director Márcia Cavallari said: “the PT began with the sympathy of the intellectual class and is now the preferred choice of those in need”. The decline is undeniable.

Since its foundation, the PT has promoted the socialist ideal although it has linked it to democracy. It proposed building a “PT socialism” that was different from the “real socialism” of Stalin. It affirmed its “commitment to full democracy, exercised directly by the masses, as there is no socialism without democracy and no democracy without socialism” in its Letter of Principles (1979).

“PT socialism” was the theme of the PT´s Third Congress (2007) which reaffirmed it “as a socialist party”. It highlighted “the working class as the historic subject of transformation” and the aim of creating “the political conditions needed to implement a socialist project within Brazilian society”. The congress was marked by the “evils” of an exclusionary model of capitalism dating from the 19^th century, which inspired socialism but no longer exists. It adopted a “profoundly anti-capitalist outlook, as capitalism is marked by an anti-humanism aspect that shows itself in the nature of exclusion”.

Socialism in the 19^th century was trying to complete “the revolution started by the bourgeoisie, taking the social power from it just as the bourgeoisie had won the political power,” according to Adam Przeworski. The anarchist group refused to take part in bourgeois political disputes. Another faction advocated taking part for propaganda purpose while a third strand dreamed of winning power to introduce socialism. The moderate wing saw the opportunity of winning power to benefit the working class. The PT preferred this latter form of socialism.

The official name, the Workers Party (Partido dos Trabalhadores in Portuguese) and not the Labor Party (Partido Trabalhista) did not convey the idea of a party directed at a single class. On the contrary, the PT aimed to win over the masses. It was arrogant and felt it held a monopoly on defending the less well-off and leading them along road to happiness. Therefore, it assumed pretensions to Gramsci-like domination and refused to admit that any party that did not have these almost divine gifts should grasp power.

The PT´s statist views led it to adopt state intervention as a means of national development. Even worse was its support of unusual ideas such as a moratorium on domestic and foreign debt and a broad nationalization program. After three successive defeats, the party realized that it would have to gain the confidence of the markets and those classes with a higher income level if it wanted to win. That led to the Letter to the Brazilian People (2002), in which it incorporated responsible ideas: obtaining a primary surplus, respecting contracts and meeting Brazil´s international obligations.

Lula adopted the slogan “peace and love”, an entrepreneur as his running mate and a new way of dressing and talking and became the favorite in 2002. He benefitted from the fall in popularity of the government of the then president, Fernando Henrique Cardoso, brought about by a perfect storm: an electrical power blackout, the spillover from the grave crisis in Argentina — both of which occurred in 2001 — and the effects from the expectations of the overhanging fears of the PT´s economic ideas. As a result of all these factors, there was a sharp depreciation of the currency which, in turn, worsened inflation, put the brake on the economy and cut employment, undermining the electoral chances of the ruling party at that time. The PT went on to win.

Lula adopted a sensible economic policy. He did not reverse the privatizations he had condemned. His capable finance minister, Antonio Palocci, won the trust of the private sector, through his clear message. Many observers at that time saw a change similar to what had occurred in Europe, where social democratic parties, such as in Germany, Spain and the UK, had identified themselves with democracy and a market-led economy.

This impression was strengthened by reforms at the beginning of the government which expanded access to credit and home loans. A new Bankruptcy Act and other breakthroughs improved the business environment. The higher productivity, which was also a result of the reforms introduced during the Cardoso government, and gains in trade with China led GDP to expand at a strong rate and boosted tax revenues. This created room for non-inflationary increases in the minimum wage and a hike in social spending. Lula glittered.

The exit of Palocci, in 2006, led to a turnaround in the economic policy. His successor, Guido Mantega, restored the PT´s old ideas. It was clear that the transformation had been limited to Lula, Palocci and a few mavericks. It was not incorporated into the party´s principles. To complete the step backwards, the international crisis in 2008 — which justified government intervention in the rich countries — was the green light that gave legitimacy to the return of policies that had lost their validity: fiscal expansionism, imposed low interest rates, protectionism, rules laying down a minimum amount of domestically-produced content in infrastructure projects, the creation of companies to be national champions, generous concessions of subsidies, one-off and incoherent tax exemptions, control of fuel and electrical energy prices, and so on.

The changes did not reinvigorate the economy, as Mantega promised they would. The opposite happened and they led to low growth, high inflation, a fall in productivity, loss of industrial competitiveness, a growing public deficit and a worsening of the balance of payments. It will be difficult to reverse all this in the coming four years. The gains in trade are feeling the effect of the fall in commodity prices. Unemployment will rise on the job market which will no longer benefit from the demographic window bonus of recent times. The overall payroll should expand at a lower rate than the population.

Rousseff´s popularity will be hit. Even assuming that the new economic team is a success, there is little likelihood of a return to the situation that led to electoral victories for the PT. The PT will face the risk of ending its current cycle in power in 2018. Should this occur, the party will discuss where it goes after the defeat. It could end up in opposition for the following two mandates and only be ready to return in 2026. Lula would be 81 then and would not be a candidate. Even if the party reenergizes and renews itself, it looks unlikely that a leader with Lula´s charism and leadership will emerge.

Another risk facing the PT, although remote, would be if it was taken over by its radical wing. In this case, it could expect to repeat the experience of the French Communist Party (PCF), which was the second-strongest electoral force just after the Second World War. In 1946, the PCF won 28.6% of the vote and elected 182 deputies to parliament, the best result in its history. The party submitted itself to orders from Moscow, maintained the line of Stalinist dogma and opposed the revisionist approach introduced following Stalin´s death in 1953. It kept quiet over the invasion of Hungary by Soviet troops in 1956. The party became isolated and went into a long decline. It won only 10 seats in the 2012 elections, less than 2% of the French parliament. Unlike other communist parties in Europe, such as the Italian party, the PCF did not reinvent itself.

The continuity of the PT in power depends on the results of Rousseff´s second mandate and the recovery of the economy, income and employment. If this comes about, the party will hang on to the support of the intermediate middle class, which represents around one third of the electorate and usually plays a decisive role in presidential elections. If the PT fails in government then it could lose in 2018 but bounce back and win at a later date. Despite the decline, the party remains rooted in broad segments of society. Its party identification rate has fallen but is still the highest amongst all the parties. It would only lose importance if it was taken over by the radicals.

The PT´s challenge is to adopt and institutionalize the transformation made by Lula. Pragmatism needs to overcome the ideological decay. The party cannot underestimate the risks to which it is subject.