The Path Dependency Blocking the Possibility of a New Type of Capitalism Favoring Redistribution in Brazil

This paper analyses the economic gridlock in a pretended transition to a new development model that would permit a progressive and long term sustainable reduction of inequalities in Brazil. This question interrogates the reasons explaining the incapacity of political change observed during last decade to induce a structural change of the economy in such direction although the necessity to obtain observable results in the fight to poverty and inequalities turned into a strong legitimation imperative for a left wing government. The analysis starts explaining the conjunction of external and internal economic factors that ended with the possibility to sustain a redistributive growth regime, as enlighten the fact that demand’s expansion (pushed by the increase of employment, wages and social benefits) has not induced a sufficient progression of productive investment. Beyond the strict economic debate about what would have been the errors in the economic policy choices, this analysis aims to explain the path dependency of sociopolitical compromises about expected distributive results of the adopted policy mix. I examine after what lessons have to be drawn for the discussion about development policy from the governmental failure in creating conditions of a sustainable growth regime favoring redistribution. The above analysis relates this failure to the impossibility of making finance a vehicle for investments and social progress due to the monetary foundations of the current development mode. The proposed characterization of the mode of development revisits its definition by the regulation theory. I focus the performing role of hegemonic economic ideas in the making of economic private and public choices, enlightening what can be called, following Foucault, the “economic governmentality” founding the expected distributive impacts of a monetary and exchange policy that permitted, thanks to very favorable external conjuncture, to conciliate the simultaneous expansion of all sources of revenues - wages, social benefits, productive and financial investments. In a last item, I identify the importance of revisiting the weight of path dependency in development issues in light of what I call an economic government of the expectations guiding the trade-off between financial and productive investment. This question interrogates the possibility to emerge in Latin America a variety of capitalism that would concretize the possibility of a transition from the state of peripheral industrialized economies to some (new?) type of developed capitalism subtended by the progressive integration of the whole labor force as the source of capital valorization, as it has been the case for the advanced economies. 

Keywords: Path dependency, governmentality, varieties of capitalism, Brazil