IN JULY, AT a convention of his small and inaptly named Social Liberal Party, Jair Bolsonaro unveiled his star hire. Paulo Guedes, a free-market economist from the University of Chicago, has done much to persuade Brazil’s business people that Mr Bolsonaro can be trusted with the country’s future, despite his insults to women, blacks and gays, his rhetorical fondness for dictatorship and the suddenness of his professed conversion to liberal economics. At the convention Mr Guedes praised Mr Bolsonaro as representing order and the preservation of life and property. His own entry into the campaign, he added, means “the union of order and progress”.
That prospect seems poised to make Mr Bolsonaro, a former army captain, Brazil’s president in a run-off election on October 28th. A survey by Ibope, a pollster, gives him around 52% of votes, to 37% for Fernando Haddad, his opponent from the left-wing Workers’ Party (PT); 9% of respondents said they would abstain. Mr Bolsonaro has benefited from a public mood of despair over rising crime, corruption and an economic slump caused by the mistakes of a previous PT government.
In the PowerPoint slideshow that passes for his manifesto, Mr Bolsonaro promises “a liberal democratic government”. Certainly Mr Guedes champions some liberal economic measures. He proposes to slim Brazil’s puffed-up, ineffective and near-bankrupt state through privatisations and public-spending cuts, and to undo the country’s serpentine red tape.
Yet Mr Bolsonaro’s words are often neither liberal nor democratic. He stands for “order”, but not the law. He urges police to kill criminals, or those they think might be criminals. He wants to change human-rights policy to “give priority to victims”, though presumably he does not mean the victims of extra-legal killings by police. He lacks a liberal regard for the public good in his plans to favour farmers over the environment and withdraw Brazil from the Paris agreement on climate change.
Whereas Mr Guedes proposes economic deregulation, Mr Bolsonaro wants moral re-regulation. He vows “to defend the family”; to “defend the innocence of children in school” against alleged homosexual propaganda; and to oppose abortion and the legalisation of drugs. As a congressman, he proposed birth control for the poor. He calls the generals who took power as dictators in Brazil in 1964 and ruled for two decades “heroes”. In July one of his sons, Eduardo Bolsonaro, who is a congressman, said “a soldier and a corporal” would be enough to shut down the supreme court. (The candidate distanced himself from these “emotional” comments, saying “the court is the guardian of the constitution.”)
When Comte hijacked liberalism
The combination of political authoritarianism and free-market economics is not new in Brazil or Latin America. Indeed, Mr Guedes’s phrase at the convention harks back to the point in the history of Latin American thought when the notions of economic and political freedom became divorced. “Order and Progress” is the slogan stamped across Brazil’s flag. There is no mention of “freedom” or “equality”. The slogan was dreamed up when Brazil became a republic in 1889 under the influence of positivism, a set of ideas associated with Auguste Comte, a French philosopher. Positivists believed that government by a high-minded “scientific” elite could bring about modern industrial societies without violence or class struggle.
Positivism was little more than a footnote in Europe. But it was hugely influential in Latin America, especially in Brazil and Mexico. It combined a preference for strong central government with a conception of society as a hierarchical collective, rather than an agglomeration of free individuals. Positivism hijacked liberalism and its belief that progress would come from political and economic freedom for individuals, just when this seemed to have become the triumphant political philosophy in the region in the third quarter of the 19th century. According to Charles Hale, a historian of ideas, positivism relegated liberalism to a “foundation myth” of the Latin American republics. It was to be paid lip service in constitutions but ignored in political practice. In a sentiment to which Mr Bolsonaro might subscribe, Francisco G. Cosmes, a Mexican positivist, claimed in 1878 that rather than “rights” society preferred “bread…security, order and peace”.
The divorce between the ideas of political and economic freedom in Latin America was in part a consequence of the region’s difficulty in creating prosperous market economies and stable democracies based on equality of opportunity. But it has also been one of the causes of that failure.
Liberalism had struggled to change societies marked by big racial and social inequalities, inherited from Iberian colonialism, especially in rural Latin America. Liberals abolished slavery and the formal serfdom to which Indians were subjected in the Andes and Mexico. But the countryside remained polarised between owners of latifundia (large estates) and indentured labourers. Missing were yeoman farmers, or a rural bourgeoisie. André Rebouças, a leader of the movement to abolish slavery in Brazil (which happened only in 1888), envisaged a “rural democracy” resulting from “the emancipation of the slave and his regeneration through land ownership”. It never happened.
Positivists rejected the liberal belief in the equal value of all citizens and imbibed the “scientific racism” and social Darwinism in vogue in late 19th-century Europe. They saw the solution to Latin American backwardness in immigration of white European indentured labourers, which initially prevented a rise in rural wages for former slaves and serfs.
The ignored lesson of Canudos
The high-minded positivists who ran the Brazilian republic were humiliated by a rebellion in the 1890s by a monarchist preacher at Canudos, in the parched interior of Bahia in the north-east. It took four expeditions, the last involving 10,000 troops and heavy artillery, to crush Canudos, at a cost of 20,000 dead (some of the defenders had their throats cut after surrendering). Euclides da Cunha, a positivist army officer-turned-journalist who covered these events, wrote in “Os Sertões” (“Rebellion in the Backlands”), which became one of Brazil’s best-known books, that the military campaign would be “a crime” if it was not followed by “a constant, persistent, stubborn campaign of education” to draw these “rude and backward fellow-countrymen into…our national life”.
That was a liberal response from a positivist writer. Again, it didn’t happen. Veterans from the Canudos campaign would set up the first favelas in Rio de Janeiro, which soon were filled with migrants from the north-east. Their descendants may end up as victims of Mr Bolsonaro’s encouragement of police violence.
Liberalism never died in Latin America, but in the 20th century it often lost out. With industrialisation and the influence of European fascism, positivism morphed into corporatism, in which economic freedom yielded to the state’s organisation of the economy, as well as society, in non-competing functional units (unions and bosses’ organisations, for example). Corporatism, with the power it awarded to state functionaries of all kinds, appealed to many of the region’s military men.
That became clear when many countries suffered dictatorships in the 1960s and 1970s. The Brazilian military regime would intermittently adopt economic liberalism, especially under the aegis of Mario Henrique Simonsen, a brilliant economist (and one of Mr Guedes’s tutors). He twice tried to impose fiscal and monetary squeezes to curb inflation. His nemesis was Antonio Delfim Netto, who favoured expansion through debt and inflation, which would cost Brazil a “lost decade” in the 1980s. The dictatorship that Mr Bolsonaro so admires ignored Da Cunha’s plea: it left to civilian leaders a country in which a quarter of children aged seven to 14 were not at school. Only in the current democratic period, under the constitution of 1988, has Brazil achieved universal primary education and mass secondary schooling.
The exception to military corporatism was General Augusto Pinochet’s personal dictatorship in Chile from 1973 to 1990. Pinochet sensed, rightly, that corporatism would require him to share power with his military colleagues. Instead, he called on a group of civilian economists, dubbed the “Chicago boys” because several had studied at the University of Chicago, where the libertarian economics of Friedrich Hayek and Milton Friedman held sway.
Trial and error from the Chicago boys
The Chicago boys applied these principles in Chile, whose economy had been wrecked by the irresponsibility of Salvador Allende, a democratic socialist overthrown by Pinochet. Their programme would eventually lay the foundations for Chile to become Latin America’s most dynamic economy at the turn of the century. But it was akin to a major operation by trial and error and without anaesthetic. They slashed import tariffs and the fiscal deficit, which fell from 25% of GDP in 1973 to 1% in 1975. They privatised hundreds of companies, with no regard for competition or regulation. Worried that inflation was slow to fall, they established a fixed and overvalued exchange rate. The result of all this was that the economy came to be dominated by a few conglomerates, heavily indebted in dollars and centred on the private banks.
In 1982, after a rise in interest rates in the United States, Chile defaulted on its debts and the economy slumped. Poverty engulfed 45% of the population and the unemployment rate rose to 30%. Pinochet eventually dumped the Chicago boys and turned to more pragmatic economists, whose policies contributed to Chile’s post-dictatorship prosperity.
Something similar happened in Peru under the presidency of Alberto Fujimori, who governed from 1990 to 2000. He sent tanks to shut down congress and pushed through a radical free-market economic programme. Again, that laid the basis for a dynamic economy but carried heavy costs. Mr Fujimori’s regime engaged in systematic corruption, and his destruction of the party system and of judicial independence had consequences that are still being felt. In Guatemala and Honduras, Hayekian anti-state libertarianism has led to dystopias from which citizens migrate en masse to escape from weak governments unable to provide public security or encourage economic opportunity (see article).
Mr Bolsonaro is a fan of Pinochet, who “did what had to be done”, he said in 2015. (This included killing some 3,000 political opponents and torturing tens of thousands.) So is Mr Guedes, who taught at the University of Chile in the 1980s, when the dean of its economics faculty was Pinochet’s budget director. Mr Guedes wants a flat income tax, a libertarian but not liberal measure. (Adam Smith, the father of liberal economics, favoured a progressive tax.)
So is Brazil in for a dose of pinochetismo? Mr Bolsonaro is not the army commander—indeed he was eased out of the army for indiscipline in 1988. And he is not a convincing economic liberal. At heart, he is a corporatist. As a congressman for 27 years, he repeatedly voted against privatisation and pension reform, and for increases in the wages of public servants.
Many of Mr Guedes’s proposals are vague, but sensible in principle and overdue. They include cutting the deficit and the public debt and reshaping public spending. Many of his proposed privatisations are necessary. As he told Piauí, a newspaper, Brazil is “paradise for rent seekers and hell for entrepreneurs”. He rightly wants to change that. But in many of these things Mr Bolsonaro may be his opponent. Mr Guedes may not last long.
Under a Bolsonaro presidency, Brazil could hope for a reformed, faster-growing economy and a president who keeps his authoritarian impulses in check. But there are plenty of risks. Perhaps the biggest is of illiberal democracy in which elections continue, but not the practice of democratic government with its checks and balances and rules of fairness. That could arise if a Bolsonaro presidency descended into permanent conflict, both within the government and between it and an opposition inflamed by Mr Bolsonaro’s verbal aggression. Frustrated, he might then lash out against the legislature and the courts. Separating economic and political freedom may seem like a short cut to development. But in Latin America it rarely is: the demand for strong government has vied with a persistent yearning for liberty.