Published by EH.Net (September 2015)

Francisco Vidal Luna and Herbert S. Klein, The Economic and Social History of Brazil since 1889.  New York: Cambridge University Press, 2014.  xvi + 439 pp. $33 (paperback), ISBN: 978-1-107-61658-5.

Reviewed for EH.Net by Anne Hanley, Department of History, Northern Illinois University.

The Economic and Social History of Brazil since 1889 is a comprehensive synthesis of more than 100 years of Brazilian economic policy and its effect on social development.  Written in well-paced and engaging prose, it moves the reader through 125 years of Brazilian history replete with ups, downs, leaps forward, falls backward, protectionism, liberalism, populism, authoritarianism, democratization, inflation, hyperinflation, at least four currency regimes, and more.  Luna and Klein, of the University of São Paulo and Columbia University, respectively, define a trend line of economic and social gains across the century that, in spite of the apparent chaos and uneven performance, moved Brazil from a backward economy and society marked by low per capita income, low human capital, low life expectancy and deep and yawning divides between rich and poor, rural and urban, Northern and Southern, white and non-white in the late nineteenth century to a modern(izing) economy marked by rising per capita incomes, high(er) human capital, falling mortality and fertility, and socioeconomic gains for members of all colors, classes, and geographies in the early twenty-first century.  Their largely positive assessment results from a macro-level perspective that successfully subdues an unwieldy narrative into broad, comprehensible trends but that delves little into the thorny problems that cause Brazil to still be one of the most unequal societies today.  The gains are unquestionable, but Brazil has a long way to go.

The book is divided into four long chapters that break along the lines of major political shifts to establish the relationship between the political narrative, attendant economic policies, and resulting social changes.  This structure works well, for political shifts were nearly always induced by or reflected major economic shifts, which had repercussions for the key social indicators used by Luna and Klein to evaluate continuity and change.  These indicators, the components of the UN Human Development Index, are income per capita, life expectancy at birth, and education.  The inputs to these components — employment, fertility and mortality, access to health services, and investments in education — comprise the social histories of each chapter.

The book opens with the Old Republic, 1889-1930, a period when export agriculture and large estates reigned and power was concentrated in the hands of the coffee planter elites and their political allies in the Southeastern region of the country.  Incomes were low, concentration of wealth was high, investment in education and health was incipient, and life was short.  Yet the shift from slave to immigrant wage labor in the 1880s began to expand consumer demand and entrepreneurial activity that stimulated domestic industry and induced modest social investments.  Major policy prescriptions to protect coffee (and other export sector) wealth ultimately undermined planter political power as the economic crisis of 1929 made agricultural price supports too costly, and rising urban and working classes provided other political elites with an attractive alternative power base.
Chapter 2 covers the fifteen year period from 1930-45 when Getúlio Vargas ruled first as president and then as dictator, swept into office in a political coup motivated by crumbling support for coffee protectionism.  The state began to insert itself directly into economic and social policy to integrate the emerging laboring and middle classes and industrial sector, creating government-controlled social welfare institutions to train, educate, empower (and contain) urban groups and regulating access to markets and currency to engineer economic outcomes that protected and promoted domestic industrialization.  Social welfare improvements eluded rural dwellers, however, as there was no political will to reform the agricultural sector.  This meant little modernization and continued land concentration in the hands of a few.

For Luna and Klein, the lasting power of the new urban and industrial development policies provides the through line for Chapter 3 that seamlessly integrates the failed democratic impulse of the post war era (1945-1964) with the dictatorial military regimes that ruled from 1964-1985.  Ambitious development programs of the 1950s based on import substitution advanced the ad hoc economic nationalism of the 1930s and 40s, but when the populists were faced with rising inflation and social unrest unleashed by expensive investments in infrastructure and basic industry yet little reform in agricultural and informal sectors, the military stepped in and stayed in to advance domestic industrialization and grow the economy while suppressing political dissent.   In return it invested in pensions, public health, and education, gains which produced improved social indicators for the middle class.

The crushing debt burden of military development programs based on international borrowing sets up the return to democracy in Chapter 4 (1985-present).  Privatization, agricultural modernization, and the eventual and lasting control of inflation has produced gains for all groups.   Major indicators show that Brazilians are leading longer, healthier, better educated lives in more prosperous conditions after the return to democracy.  The wide gaps in prosperity and living standards between Northeast and Southern regions, between rural and urban regions, between men and women, and between whites and non-whites are diminishing and converging.  The authors close the book by acknowledging a long list of very serious problems yet to be tackled, but conclude that “one can only marvel at … the extraordinary unity in which the nation finds itself as a society that feels that the future may have finally arrived” (p. 354).

This is the second optimistic book I have read about Brazil in the past year, challenging my well-honed sense of cautious pessimism about its prospects after decades of living through, studying, and teaching its turbulent history.  True, Brazil’s democracy has proved to be resilient in the face of some pretty big challenges since 1988.  True, as the authors point out, Brazil has all but eradicated extreme poverty and appears committed to continuing to close the gap between rich and poor.  True, virtually all macroeconomic indicators point to optimistic trends for the future.  But Brazil’s gains represent improvements from its own very unequal and poor past.  It still ranks among the top ten in the world for inequality; has a terrible track record of investing in public services, sparking months of street protests in the lead up to the 2012 World Cup; and is wracked by ongoing cases of corruption and ineptitude that have led of late to angry calls for military intervention, a callous and dangerous whim that is ignorant of a terrible history (see Chapter 3).  Readers unfamiliar with the magnitude of the challenges Brazil continues to face might erroneously conclude, “Mission accomplished” from this very good and comprehensive survey.  I marvel at the changes to society, economy and polity since I first went to Brazil in the 1970s, and am heartened by the optimistic light of this interpretation of Brazil’s recent gains and better future.  I guess I will keep my cautious pessimism in check and hope that these macro level trends really do translate into a more prosperous future and a more egalitarian society.

Anne Hanley is associate professor of Latin American history at Northern Illinois University.  She is author of Native Capital: Financial Institutions and Economic Development in São Paulo, Brazil 1850-1920 (Stanford University Press) and is writing a book on municipal finance and the provision of public services in Brazil.

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