The Neo-Developmentalist Front: Reflections on "New

Developmentalisms" in the light of the Lula’s governments (Brazil,

2003-2010).

Vaz, Vinicius Rezende Carretoni1

Abstract
Since the mid-2000s, various sectors of Brazilian society, from workers to intellectuals of the political
and economic field, have been surprised by the unaltered maintenance of the orthodox macroeconomic
project in Lula's government. Its origin in the union movement, its history of struggle in support of the
workers reflected little in its option to perpetuate the policies indicated by the Washington Consensus.
Nevertheless, despite the maintenance of macroeconomic policy, the PT government is marked by two
characteristics, at first glance positive: the economic growth resulting from the commodity boom and the
advance of social policies to combat poverty that transformed much of the reality of the " super-breeding
overpopulation" of Brazil (SINGER 2010). This second phenomenon propitiated for a group of
intellectuals to formulate the thesis that Brazil would be in a process of ascension to "social
developmentalism" or in a social-developmentalist regime (MERCADANTE, 2010). On the other hand,
Brazil was in a process of deindustrialization, imports were constantly growing and Brazilian
indebtedness was not reflected in the gross formation of fixed capital. A fraction of economists in
understanding the consequence of this conjuncture, met with the intention of formulating a new theory for
the national development, this would receive the name of new developmentalism The proposal of this
paper is to make a critical reflection on the two currents to the extent that their interpretations shed light
on Lula‟s government, its limits and possibilities.

Introduction

The debate about the conceptions of development stemming from the decade of
2000, propiciated by the rise of progressive leaderships in Latin America, returned to
the agenda of intellectual and political discussion. That is because, since the mid-1980s
and especially in the 1990s, most Latin American countries have been experiencing low
economic performance and a precarious social condition with an enormous rate of
unemployment, misery and social inequality on one hand, and productive regression and
deindustrialization on the other.
This scenario started to signal changes since the 2000s, due to improvements in
social and economic indices, Latin America started to show a growth in its Gross
Domestic Product (GDP) even more than in the central regions such as the Euro. The
rise of progressive governments, a phenomenon called "pink wave" (SAAD-FILHO,
2016) brought with it the developmentalist hope that Latin American countries would
finally adopt policies for technical progress and increased competitiveness in the
international market, abandoning the orthodox macroeconomy and later losing the

1
Doctoral student linked to the postgraduate interunit program of integration of Latin America at the University of São Paulo.
characteristics of a continent that exports commodities and that is characterized by
rentier domination.
It will not necessarily be the return of the policies proposed by classical
developmentalism, such as the model of import substitution to complete the
industrialization process, or the consolidation of the national productive forces without
external participation. However, "neo-developmentalism" recovers the thesis that it is
possible for Latin American countries to take an economic leap that will lead to a break
with dependence, underdevelopment, or to get out of the "middle-income trap" within
the capitalist regime (BRESSER-PEREIRA, 2014).
Nevertheless, in the theoretical field “neo-developmentalism” presents itself as
an outbreak of diverse currents of structuralist inspiration; a heterogeneous set of
economic projects that have in common the understanding of the necessity of rupture
with the orthodox project and the reutilization of the State as a creator of opportunities
in the economic and social field. The two main currents in Brazil are the social-
developmental and the new-developmental.
In this article, we propose to discuss the strategic transformations promoted
within the developmental thinking from its classical formulation, and so to explore the
new paradigms proposed by neo-developmentalism. We will then try to look at the
question of whether the latter has deeper limits than those present in its classical
formulation.

The Classic Developmentalism and its Crisis

Initially, developmentalism emerges as a synthesis of Latin American

structuralist thinking, which has as its main exponent the Economic Commission for
Latin America (ECLAC). Among its benchmarks are the works of Raul Prebisch and
Celso Furtado who, through criticism of the international trade, demonstrate that the
neoclassical theory of comparative advantages was wrong, given the fact that
productivity was essentially higher in countries in which the productive structure was
predominantly industrial (PREBISCH R. 1949; FURTADO C. 1965).
It was necessary, therefore, to overcome the dichotomy center x periphery as
well as the end of the reproduction of the cycle of poverty present in underdeveloped
countries. Underdevelopment is not then a predecessor stage of development that in its
turn would be achieved as a "natural" cycle. Underdevelopment is characterized as a
specific condition that could be overcome with industrial development, combined with
the expansion of the internal market through a strategy traced with the leading role of
the State, not leaving the economy at the will of market forces as the neoclassical
claimed.
Bielchowsky (1995) summarizes very well the role of Brazilian
developmentalism, which has similarities with the strategy of the other Latin American
countries:
We understand by developmentalism, in this work, the ideology of
transformation of Brazilian society defined by the economic project that is
composed of the following fundamental points:
a) integral industrialization is the way to overcome poverty and
underdevelopment in Brazil;
b) there is no way to achieve an efficient and rational industrialization in
Brazil through the spontaneous forces of the market; therefore, it is necessary
for the State to plan;
c) planning should define the desired expansion of the economic sectors and
the instruments to promote this expansion; and
d) the State must also order the expansion, by capturing and guiding financial
resources, and by promoting direct investments in those sectors where private
initiative is insufficient (BIELCHOWSKY R. 1995. P.7)

The consolidation of these economic policies would, in structuralist

interpretation, bring about the strengthening of an "autonomous national bourgeoisie"
that would play a crucial role in building the Latin American nations, making them
capable of resisting the forces of international competitiveness.
If until the 1950s industrialization began to occur at an accelerated pace in Latin
America, after the military coups the association of national elites with the international
elite took place. Just right after the beginning of the decade of 1970, the stagnation and
the economic crisis began to ravage the Continent. After the oil crises, Brazil like other
Latin American countries found itself completely indebted to its international creditors,
a debt that plunged the country into the so-called "Lost Decade" in 1980. This is
because the Brazilian option, and the option of most of the Latin American countries,
was to grow with external savings and a large part of the debt suffered a dramatic
increase because of floating interest rates.
Due to international pressures, Latin American countries were forced to adopt
liberalizing policies formulated by the Washington Consensus2. These policies were
based on the assumptions made by Luiz Gonzaga de Mello Belluzzo (2009):

2
Washington Consensus is a set of measures formulated in the late 1980s by economists from the World Bank's IMF and the US
Treasury founded by John Williamson that in the 1990s became the official policy of the IMF and its prescriptions.
 1) price stability would create conditions for long-term economic calculation,
stimulating private investment; (2) trade liberalization (and currency
appreciation) would impose competitive discipline on domestic producers,
forcing them to make substantial gains in productivity; 3) privatizations and
foreign investment would remove supply bottlenecks in industry and
infrastructure, reducing costs and improving efficiency; (4) currency
liberalization, coupled with predictability in the evolution of the real
exchange rate, would attract sufficient "external savings" to complement the
domestic investment effort and to finance the current account deficit; 5) the
overflow of income and wealth, promoted by the new dynamism stimulated
by the markets and by the focused action of social policies, is the most
efficient way of reducing inequality and eliminating poverty (BELLUZZO,
2009).

This political vector was radicalized upon the rise of Fernando Henrique
Cardoso to the presidency. As of his election, the control of capital movements from
within and outside the country was abolished and privatizations, economic
financialization and trade liberalization were advanced. This has brought to the
Brazilian context several impacts on important industrial segments, with sales and
mergers of national companies (both public and private), as well as the increase in the
process of denationalization or reconversion of activities for the assembly of imported
components.
The Brazilian industry at this time was going through a moment of complete
instability. It should be noted that, if we restrict ourselves to the indices of productivity
of the industry, it is not possible to observe the phenomenon of deindustrialization in the
1990s, since even if there was no industrial policy or a clear development project there
was an increase in productivity, even if it was not at all significant to the processing
industry:
With regard to the variation of labor productivity, [...] it shows the low
dynamism of the Brazilian economy as a whole, given the growth of only
0.8% p.a. between 1995 and 2008. In the manufacturing industry, the result
was even worse, with a negative average annual variation of 0.2% p.a., in this
period. As services remained virtually stagnant, the labor productivity of the
economy as a whole was the result of the excellent performance of
agriculture (5% p.a.) and mining (3.5% p.a.) (SQUEFF, 2012, pp. 32-33).

Out of all those factors of the economic policy of the 1990s, we can consider
that the concept of deindustrialization does not explain fully the conjuncture of those
times, since the total participation of the industry in the GDP, even though it remained
stagnant, did not fall. However, we can highlight the possibility of a "selective
depuration", a term used by Eli Diniz and Renato Boschi (2004). Another concept used
to explain the industrial context of the 1990s would be "de-industrialization" or "relative
deindustrialization" (FEIJÓ; CARVALHO; ALMEIDA, 2005).
 The consolidation of the neoliberal injunctions as vectors of national politics is
contrasted with low economic performance indices, with the GDP between 1995 and
2002 growing at an average rate of 2.3%. The Fernando Henrique‟s administration
started with a public debt of 23% out of the GDP, reaching in 1998 about 35% out of
the GDP (SALLUM, 1999). Social inequality reaches its peak and the minimum wage
reaches the lowest level in history since its creation, instating a situation of great
instability (CORSI, 2014).
These phenomena concretely signal the loss of power by the "national industrial
bourgeoisie" in the face of international capital entering the country by appropriating
the productive forces built over the national development era and by attacking workers'
rights as never before (FILGUEIRAS, 2007). Despite the weakening of the national
development project, as well as increasing dependence, questions about the neoliberal
development project and the deepening of social inequality indexes would only be
raised after the rise of the Partido dos Trabalhadores3 to the 2003 presidency.

The Performance of the Partido dos Trabalhadores

In spite of the low growth, compared to the developmental periods of Brazil,

Lula‟s government achieved a growth relatively higher than the indexes presented by
the previous president, mostly if they are compared with the second mandate of
Fernando Henrique. Although Lula‟s government has not undergone major
transformations regarding growth rates, the little improvement presented motivated its
allies to believe or to propagate that Lula‟s administration had initiated a process of
rupture with the previous government and with neoliberalism (BOITO Júnior, 2007).
Apparently, at the beginning of his administration Lula's government embraced
FHC's neoliberal economic strategy, despite criticizing his "cursed inheritance." This
became even clearer when the appointment of Henrique Meirelles as president of the
Central Bank (CARCANHOLO, 2010) took place. The government, with its argument
that it was not possible to "change treatment in the midst of illness," chose to respond to
the evils of orthodox politics with more orthodoxy (SADER, 2007).
Despite of this choice, which was also influenced by external pressures already
in 2002 due to the huge capital flight, because of the "fear" that the financial sector
would have of the changes that would be possibly applied by PT. Already in the first
3
In a direct translation: Workers' Party
year of government, sectors of the situation celebrated the reversal of the trade balance,
which turned to be surplus. We can also observe a relative increase in social expenditure
under PT‟s management. The total number of formal jobs under the CLT (Consolidation
of Labor Laws) regime has increased to 10.8 million formal jobs in the labor market,
almost double to the period 1990-2002.
These features of Lula‟s government at first sight could signal that Brazil would
have resumed the course of developmentalism and made a break with the condition of a
dependent country. One of the theses, that of Barbosa (2013), separates Lula's
management into at least two: before 2006 and after 2006, because until this year little
has changed in terms of macroeconomic management. The main changes would occur
after 2006, with the entry of Guido Mantega in the Ministry of Finance and, mainly,
after the international crisis established in 2008 (BARBOSA, 2013).
It is also observed with the entry of the Partido dos Trabalhadores the
valorization of the minimum salary, that until the end of Lula‟s administration had an
increase of 53.67%. In addition, a number of income transfer policies were
implemented, such as Bolsa Família (family allowance), credit democratization and a
timid agrarian reform, which contributed to the dynamization of the rural economy and
the reduction of social inequality. We can see in the first term of Lula‟s government a
clear reduction of poverty and increase in consumption, with partial macroeconomic
stability and GDP growth (CASTRO, 2012).
On the other hand, the economic and political damages of maintaining the
orthodox macroeconomic tripod can be analyzed one by one: among the boundaries
consolidated from the macroeconomic tripod is the exchange rate policy. It is
noteworthy in Brazil that despite the reading of Washington Consensus economists
defending the "floating" exchange rate policy, for some reason this fluctuation kept the
Brazilian exchange, almost always appreciated. This is because Brazil would suffer
from a problem called "cyclical overvaluation of the exchange rate" which is one of the
reflexes of what we might call the "Dutch disease" or "curse of natural resources"4. The
appreciation of the exchange rate, in its various forms – whether by the exchange
anchor or by the process of increasing the stock of foreign currency or other forms of
exchange appreciation – is not only a reflex, but also deepens the Dutch disease.

4
Bresser-Pereira (2014), characterizes the Dutch disease as a phenomenon where a country with plenty of natural resources would
have two equilibrium exchange rates, a nominal equilibrium and another of industrial equilibrium, i.e. for the commodity producing
sector is economically a more appreciated exchange rate, different from the industrial sector that needs a less appreciated exchange
rate in order to make its products more competitive internationally.
 The financialization of the economy adds another factor of influence to the
exchange policy, since the valuation of the currency guarantees an increase in the
liquidity of financial capital, it thus favors the financial system. (BRESSER-PEREIRA,
2014). On the contrary, the Dutch disease was not neutralized, but it was deepened by
policies formulated by the State. The result was growing current account deficits and the
increase of external debt, until it became uncontrolled, generating the crisis of 1999.
However, it cannot be affirmed that the reason for the exchange appreciation is only the
valuation of the fictitious financial capital, because there are social reflexes in the
exchange appreciation.
Whenever there is exchange appreciation, the upper-class sectors, which
measure their wealth in dollars, see its increase due to the greater parity with the dollar;
the middle class, which is a large consumer of imported products, has a greater
purchasing power; and the poorer sectors have the value of most products in their
consumer basket decreased. Then, among the reasons for the exchange appreciation, is
added the "exchange populism" (BRESSER-PEREIRA, 2014).
The maintenance of this "exchange populism", in the long term, brings another
negative phenomenon to the Brazilian economic structure: the deindustrialization
process, responsible for deepening the economic vulnerability and the low dynamism of
the Brazilian economy (SQUEFF, 2012). Another policy that negatively affected the
country at the time was the appreciation of the basic interest rate. The high interest rates
brought speculative capital to the country, but on the other hand, it increased the State's
indebtedness, reducing its "room for maneuver" to develop the country's infrastructure.
The attempt to solve Brazil's economic problems, in order to reinsert the country on the
axis of economic growth, was totally dependent on the external environment
(GONÇALVES, 2002).
Lastly, since fiscal policy has to maintain a high interest rate, the State must
avoid the growth of public indebtedness, since in order to satisfy the rentier, it is
necessary for the State to signal that it can pay its commitments. For that, the policy of
generating primary fiscal surpluses is maintained. The problem with this policy are the
interests that do not "fit into GDP" and not the current expenditure. By limiting
expenses of the State, orthodox macroeconomic policy also "plasters" the investment
rate (GONÇALVES, 2013). The central part of this critique arises precisely with the
new-developmental current, as will be demonstrated later.
 Whether or not Lula‟s government represents a real rupture with the orthodox
model, the rise of the State as a protagonist of public policies to combat poverty,
especially in the most precarious sector of society, helped to influence what would later
become a rich debate in the field of structuralist thinking, given the fact that it was again
possible to think of a greater State performance, breaking with the orthodox tradition.
One of these currents was directly influenced by the Partido dos Trabalhadores, both by
its militants and intellectuals, and by its action within the State. This would be the
current entitled "social developmentalism".

Social developmentalism

Social developmentalism as a theory has, among its contributors, predominantly

intellectuals of Unicamp and intellectuals linked to the Partido dos Trabalhadores, such
as those already mentioned. Differently from new developmentalism, as we shall see,
social developmentalism has its reflections more scattered and analytic contours not yet
finished. However, we can characterize it as a developmentalist thought whose main
contribution is social inclusion as the axis for achieving development. (ROSSI, 2015).
This axis can also be considered a rupture with the classic developmentalism:

The reflections involving social developmentalism are still fragmented and

with less academic insertion, having resulted largely from partisan debates
and government policies. Its key idea is the definition of the social as the axis
of development, that is, it proposes a reversal of priorities regarding the old
and the new developmentalism in which the development of productive
forces was the main objective to be achieved. (CARNEIRO, 2012, p.773).

In interpretation by the social-developmentalist intellectuals, it was based on this

project, centered on the agenda of "growth with social justice," that Lula would have
applied a strategy that would overcome both developmentalism and neoliberalism
insofar as social development and the fight against inequality are concerned
(MERCADANTE, 2010).
Ricardo Carneiro (2012) believes that social developmentalism emerged in a
favorable context, it being a strategy forged to exploit the potential of the domestic
market in a timely manner, yet it would have structural limits that should be
complemented later:
Given the high concentration of income observed in Brazil as well as the low
level of household indebtedness, the strategy proposed above can boost the
 economy for a considerable period, but it will inevitably lose momentum
over time. It will, of course, have to be supplemented or supported by other
dynamic axes, in particular that of autonomous investment. The expansion of
the infrastructure and its productive chains is one of the driving forces. There
is clearly a suppressed demand for economic and social infrastructure in
Brazil and its expansion will be an additional autonomous element of growth
due to the indivisibilities of this sector – as it happened in moments of
accelerated growth during national developmentalism (CARNEIRO, 2012,
p.775).

The success of social developmentalism would depend, therefore, on the

capacity for job creation, the development of the internal market and external constraint,
given that the increase of purchasing power without an effective policy of productive
restructuring and industrialization leads to an increase in consumption of imported
products, rendering the trade balance in deficit. To overcome the deficit in the trade
balance it is appropriate for social developmentalism to treat the economic and social
infrastructure in different ways, as Carneiro (2012) arguments.
The economic infrastructure would give the private sector the possibility of
making a profit, allowing the State to make partnerships that would encourage private
investment. The second infrastructure, the social one, would not be possible to expand it
through the support of the private sector, the latter would always be in favor of
increasing productivity, which would be contrary to social development. Roughly
speaking, Carneiro (2012) understands social developmentalism as a strategy with
varying degrees of priority:
In light of what has been discussed and the recent experience of Brazilian
development, the social-developmentalist strategy comprises four distinct and
necessarily complementary axes, but which have been implemented with
different degrees of priority and maturity: i) the improvement of the
distribution of income; ii) expansion of economic and social infrastructure;
iii) reindustrialization via chain densification; iv) the expansion of the sector
based on natural resources (CARNEIRO, 2012, p.776).

In this case, social infrastructure would depend exclusively on the State's leading
role and public resources. This characteristic was the main factor for Pedro Paulo
Zahluth Bastos (2012) to call social developmentalism by "State-oriented distributive
development", because in his interpretation, the relation of development, financing and
social distribution would not be so "reconcilable" as the term "social developmentalism"
transpires, due to the lack of interest of the private sector in financing distribution and
income.
The full realization of any of the expansion frontiers requires an expansion of
State planning, but also the provision of fiscal resources. Thus the financing
needs of the demands of economic and social development are not as easily
 reconciled as the use of the term social developmentalism seems to imply. So
I prefer a term that suggests a less rigorous harmony or unity, such as State-
oriented distributive developmentalism. (BASTOS, 2012, p.797).

The Lula government's characterization as one based on the conjunction of

growth with income distribution has also had repercussions on the organization of social
classes in Brazil, as, from the distribution of income, the rise of the subproletariat, a
fraction of a class that improved its living conditions through targeted policies,
preponderant in the government of the time (SINGER, 2012, 2015). Hence, focusing on
the reorganization of class fractions, social developmentalism would have a different
strategy from new-developmentalism.

New developmentalism

As already pointed out, it was only in the 2000s that neoliberalism would be
questioned through the rise of several progressive leaders in every Latin American
continent. Initially, there is an improvement in GDP growth rates and social indexes in
most Latin American countries. However, is it possible to affirm that this growth
originates from policies thought by the States? Initially, this is a result of increased
demand for agricultural products from Asian countries, especially from China, as we
can see in commodity prices.
Despite the fact that economic stabilization has been a reflection of external
forces, part of the neo-developmentalist literature demonstrates a relative concern about
the fact that Latin American economic growth is occurring along with the loss of
technological complexity, that is, reprimarization of the economy (GALA, 2017). New
developmentalism then arises to propose an economic strategy that, inspired by Asian
experiences, is opposed to orthodox thinking:
The new developmentalism is a "third discourse" between the old
developmental discourse and conventional orthodoxy. It is the alternative to
conventional orthodoxy that has been developing in Latin America since the
early 2000s, with the participation of Keynesian economists and development
economists. Their proposals are predominantly macroeconomic and derive
from a "structuralist macroeconomics of development" that is being defined
by critical Latin American economists, using the Asian experience as a
parameter (BRESSER-PEREIRA, 2010 p.17).

New developmentalism would be an economic and political theory that emerged

with the intention of "explaining human progress or development" (Bresser-Pereira,
2016, p. 238), and then formulating a strategy of breaking away from external
dependence.
Having as a main formulator of the concept Luiz Carlos Bresser-Pereira, it was
initially used in an article published by the newspaper Folha de São Paulo in 2004,
titled "The New Developmentalism". This would be a new economic theory that would
arise with the aim of organizing a new development strategy for the country,
overcoming the classic developmentalism and offering a way out for middle-income
countries that deepened their vulnerability from the hegemony of conventional
orthodoxy.
New-developmentalist theorists do not disregard the role of national-
developmentalism either as a historical phenomenon or as an economic theory, but they
believe that the historical moment is another, with new challenges. In the words of
Bresser-Pereira (2004): "Brazil needs a new developmentalism not because the old one
was wrong, but because it finds itself in a different stage of development, it lives a new
reality and it faces new challenges." (Bresser-Pereira, 2004, p.2).
There are also differences in the international situation, where the country would
need more support from the private sector, and the State would have a different role to
play. In summary, three major differences between the periods are raised:
The old developmentalism was based on the substitution model of imports
and, therefore, on the protection of the commercial account. Today, the big
protectionists are the rich countries. Brazil is interested in continuing to open
its commercial account, albeit in a negotiated way, with due reciprocity, in
order to be able to export. Second, Brazil already has a reasonably installed
economic infrastructure, so there is no longer any need for the State to invest
directly in industries such as steel or petrochemicals, which the private sector
can do better. Third, concerning about macroeconomic stability is more
necessary today than in the past due to the instability caused by international
capital flows. In summary, the market and the private sector now play a
greater role than they did between 1930 and 1980: the form of planning must
be less systematic and more strategic or opportunistic, in order to allow
national firms to compete in the globalized economy (BRESSER-PEREIRA,
2009, pp.2-3).

This theory would then differ from classical developmentalism. In classical

developmentalism, industrial policy was central, based on import substitution, and the
State plays a central role in making investments and saving money. The new
developmentalism gives more importance to the market and the growth of exports
combined with a strong domestic market, rejecting fiscal deficits and avoiding inflation
(BRESSER-PEREIRA, 2010).
 Despite the greater role of the market in the interpretation of the new
developmentalists, this does not rule out the need for a strong State. In the introduction
of the work "New developmentalism - A National Project of Growth with Social Equity"
entitled "Why New developmentalism?", written by João Sicsú, Luiz Fernando de Paula
and Renaut Michel, it is defended the role of the State in the economy:
Without a strong State, monopolies tend to establish themselves,
bringing to the entrepreneurs the sensation of an easy profit and of disregard
with the necessity of the reduction of the prices and improvement of the
quality of its production. Without a strong State, the market would be
anemic, creating a situation in which entrepreneurs settle in and lose the
revolutionary impetus for innovation, cost reduction and the quality of the
goods they produce. Keynes estimated that the State would be able to
arbitrate and stimulate competition and, in addition, to influence decisively
on the most relevant economic variables, among them, unemployment and
the distribution of income and wealth "(SICSÚ, PAULA, MICHEL , 2005,
p.XXXIX).
This would not mean, in the interpretation of the adepts of this theory, a strong
State with a weak market, but a strong State with a strong market, since these would
fulfill relatively different roles (SICSÚ; PAULA & MICHEL, 2005).
Even with differences in relation to national developmentalism, these have an
important common trait: they both believe that the way to achieve development, full
employment and the reduction of inequality lies in industrialization and in a complex
productive accompanied by an increasingly technological capacity, and it might occur in
different ways, either by import substitution or through an export-oriented model, which
in Bresser-Pereira's interpretation (2010) would have its advantages:
There are two major advantages of the export model over import substitution.
Firstly, the market for the industries is not limited to the internal market.
Second, if the country adopts this strategy, the economic authorities, who are
making industrial policy in favor of their companies, have an efficiency
criterion on which to rely: only companies that are efficient enough to export
will benefit from the industrial policy [...] (BRESSER-PEREIRA, 2010, page
15).

As for the orthodox model, new developmentalism would present, from its very
beginning, much more criticism and divergence, one of which is towards the very
concept of "macroeconomic stability":

In contrast to conventional orthodoxy, the differences are much deeper. First,

while one is a development strategy, the other is a strategy of 'kicking the
ladder', it is a non-conspiratorial but effective strategy of disorganizing the
national States of countries competing in the global arena with cheap labor
force. There is a common point between the two perspectives: both new
developmentalism and conventional orthodoxy are favorable to fiscal
equilibrium, but the motivation is different .... The disagreement between the
new developmentalism and conventional orthodoxy begins with the
 definition of macroeconomic stability. Unlike conventional orthodoxy, which
is concerned only with inflation and fiscal balance, new developmentalism is
also concerned with the equilibrium of the balance of payments, and with
reasonable full employment. (BRESSER-PEREIRA, 2004, p. 3)

If the role of the State already at the end of developmentalism had diminished
because of the association with the international bourgeoisie, in new developmentalism,
its role mainly controls the five macroeconomic prices: the exchange rate, the interest
rate, the rate of wages, the rate of inflation, the rate of profit and the reduction of
economic inequalities.

Disagreements Between The Two Currents.

It is at this point that the conflicts between the two currents of thought become
more evident. Bastos (2012) makes a defense of social developmentalism. In his
interpretation, new developmentalism would break with the centrality of Latin
American structuralism, for it believes in the ability of the private sector to lead
development through the allocative efficiency of the market, if the State can control
macroeconomic prices. In his words:
According to Bresser-Pereira (2012), the central argument of the exporting
developmentalism of the private sector is that, in contemporary Brazil,
companies would already have the technological capacity and sufficient
financial resources to invest in high technology intensive industrial sectors to
the external market. The emphasis of classical structuralism, first, on the
direct intervention of the State, secondly, on the integration and
diversification of the domestic market as the primary source of growth,
would be antiquated. Thus, the fundamental action of the State would be to
ensure correct macroeconomic prices (interest and exchange, above all). It
can be said that this developmental trend shares with neoliberalism, in a
minor tone, the valorization of the private sector and exports as engines of
growth and the devaluation of the role of the State as banker and investor,
although it does not devalue the role of the State as a driver development
strategy (BASTOS, 2012, p.789).

For Bastos, the limitation of the State created by new developmentalism, which
diminishes its role as administrator of macroeconomic prices, is a political option that
tends to make export policy essential, given the lack of a deeper formulation on the
importance of development of the internal market. Morais and Saad-Filho (2011) agree
with Bastos's Statement:
The great missing point in the new-developmentalist literature is the
emphasis on the enlargement of the internal market, one of the most
outstanding pillars of ECLAC structuralism. This absence is counterbalanced
by the emphasis on external trade and international competitiveness. This
approach approximates the new developmentalism of neo-structuralist
 thinking present in the ECLAC literature in the 1990s, being justified by the
emergence of a new technological revolution and globalization. (MORAIS &
SAAD-FILHO, 2011, p.515).

Nevertheless, Bresser-Pereira (2016) rejects these criticisms in saying that this

would be a misleading Statement, since the central objective of the new
developmentalism would be the fight against "inequality and injustices", but without
executing the project of the workers in short-term as social developmentalism did,
which, by maintaining the appreciation of the exchange rate, promoted exchange-rate
populism and increased the purchasing power of workers in short-term:
Second, it assumes that a consistent competitive exchange rate
promotes an increase in inequality, which, as we shall see in the next
paragraph, is true of profits that must be satisfactory to motivate investment
by firms, but false in relation to wages, since the income of the rentiers are
also benefited in the short term. In fact, there is in social developmentalism a
high preference for immediate consumption which is highly detrimental to
workers in the medium term.
Second, there is the claim that New developmentalism is not social,
shows little concern about inequality. It must be clear that this criticism is not
acceptable. The reduction of inequality is an objective of the most important
in capitalist societies, which are inherently unequal or unjust. But this does
not mean that the proposed policies should always express the short-term
interests of the workers or the poor. (BRESSER-PEREIRA, 2016 p.247)5.

We note from this statement that, on one hand, new developmentalism assumes
a concern with the financial stability of workers in the long term, whereas social-
developmentist policy, both in its regards to the capacity to generate jobs with more
added value, and in its capacity to increase the purchasing power and the economic
stability of the workers, is impracticable, as it generates the deindustrialization and the
indebtedness of the families.

Conclusion

The period of greatest economic and social development in Brazil in the

twentieth century was undoubtedly the period to which the State put itself as the
protagonist to plan, organize and execute an industrialization project, realizing the
impossibility of the market for such. This period, understood as a "classic
developmentalist" one, came to its exhaustion and at the end of its capacity to respond
to the aspirations of a globalized and financialized environment, especially after the
option to grow with external savings.
5
In this quote a typing error is seem to be made in the original text.
 Thus, the Brazilian economy adheres to the orthodox current and starts to apply
the policies of the Washington Consensus, reducing the capacity of the State to act and
advancing trade liberalization, privatization and financialization. This period meant the
loss of participation in the manufacturing industry, rising unemployment and falling
wages of workers.
After the FHC administration, the rise of the Partido dos Trabalhadores
generated relative hope that this framework would change and, in fact, part of its social
policy signaled that the State would take a deeper action, at least in the fight against
inequality, which mobilized part of the intellectuals understand that Brazil would show
traces of a "social-developmentalist" rupture.
On the other hand, exchange-rate populism and the presence of the orthodox
macroeconomic tripod contributed to the deindustrialization, which worried part of the
intellectuals who believed to be an unfeasible policy in the long term, this sector then
founds the new developmentalism, proposing that the State neutralizes the "Dutch
disease” and also controls some macroeconomic prices, such as interest rates, exchange
rates, wage rates, profit rates and inflation, promotes the fight against inequality and
increases industrial participation.
These two currents that make up "neodevelopmentalism", although they present
disagreements about social and economic policy, and emerge in different ways, they are
new currents that deserve the attention of the scientific field, in view of the profound
capacity to oppose the orthodox project, still hegemonic in this field.

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