Global Capitalism
-by Celso Furtado-

Spanish by Jorge E. Navarrete
translated by D. Ohmans
© copyright 2009

Text imprint Mexico City, Fondo de Cultura Económica, ©1999

Global Capitalism TOC

	I. The Long Road to Utopia

		1. Intellectual influences
		2. The researcher's role
		3. Imagination "versus" institutionalized science
		4. Discussion of 'The Economic Growth of Brazil'
		5. The ruling classes
		6. The importance of Prebisch
		7. Emergence of underdevelopment
		8. Role of the social organizations
		9. Function of the Nation-state

	II. The New Capitalism

	III. Globalization and National Identity

		1. The process of globalization
		2. Preservation of national identity

	IV. Overcoming Underdevelopment

		1. Collectivization of the means of production
		2. Priority to the satisfaction of basic necessities
		3. Increase in external autonomy

	V. Reflections Upon My First Theoretic Essays

		1. Brazilian thought
		2. The theory of underdevelopment

	VI. The New Challenges

	VII. The Cultural Dimension of Development

	VIII. The Risk of Ungovernability

		1. Increase in dependency
		2. What sort of globalization?
		3. Pressure of social forces
		4. The Landless Rural Workers' Movement
		5. Integrative role of the state
TODAY NO ONE can dismiss the fantastic concentration of power that is embodied in what are called financial markets, dominated by exchange speculation. With the advance of globalization, those markets are now the most profitable. Therefore, and increasingly, the distribution of world income responds to virtual operations performed in the financial sector. This is the clearest manifestation of an emerging reality well described as global capitalism, the precursor of a future world system of power. The configuration of that system of power and its institutionalization--including the role that having the dollar will represent in it--shall become the main political task of the coming decades. The European project to create a single currency and to integrate their central banks, about to be realized in the near future, will be the first great experiment with multinational monetary policies, and can be seen as an attempt to affect the new configuration of world power. The role that will correspond to the nation-states in this new political design should be a cause of concern, since the distribution of income generated in ever more interrelated productive systems will depend on it. There should be no doubt whatsoever that space shall continue to exist for the exercise of political will, as long as it is vigorously expressed. The reflections contained in the pages below indicate some of the paths that are necessary to explore if one wishes to influence the configuration of the new power structure now dawning, from which it is impossible to escape. CELSO FURTADO Paris, April 1998 I. THE LONG ROAD TO UTOPIA (1) INTELLECTUAL INFLUENCES My intellectual development unfolded under a triple influence. At the beginning, I was seduced by positivism, the idea that science generates knowledge in its most noble form. It was not a primitive Compteanism, but instead a confidence in experimental science as a tool to discover the secrets of nature. Subsequently the influence of Marx was felt, by means of Karl Mannheim, the author of the sociology of knowledge, which referred scientific understanding to its social context. That was the starting point for my interest in history as an object of study. The third current of thought that influenced me was U.S. sociology, by way of Gilberto Freyre. The Masters and the Slaves (2) opened the cultural dimension of historical processes to me. This contact with North American sociology corrected the excesses of my historicism. I consider it important that my approach to Marxism was accomplished through the sociology of knowledge. When I read Capital in a Marxism course that I took after the war at the Institute of Political Studies in Paris, I already knew enough modern macroeconomics so as not to be seduced by an economic determinism that provided an explanation for everything by means of a simplification of the world. THE RESEARCHER'S ROLE The motivations of the investigator are numerous. The most fundamental, however, is confidence in one's own imagination - and knowledge of how to use it. That confidence translates into the conviction that it is possible to intuit a reality of which only one aspect is known, similar to what is done in paleontology. In this manner, the value of the researcher's work derives from the mixture of two ingredients: imagination, and courage to take risks in an uncertain search. The former leads me to the following assertion: science is conducted by those who are capable of exceeding the fixed limits now imposed by the university world. The tendency there for "canned products" to predominate characterizes the basis of academic knowledge. Due to reasons not to be pursued here, many persons of talent become frustrated in the university environment. I very quickly noticed that, if I dared use imagination, I would enter into conflict with the establishment of today's economic wise men. The alternative consisted in resigning oneself to reproducing the conventional, notably poor, wisdom, given our subordination in the area of scientific knowledge. It is not easy to explain that we had rebelled and begun to create out of our own imaginations. It was precisely that, which occurred in Latin America: we decided to identify our problems and elaborate their theoretic treatment. It was there, waiting to be captured, a Latin American and more particularly a Brazilian historical reality. The emergence of CEPAL (3) during the first postwar years, allowed our self-confidence to take a corresponding leap. Yet it is not enough to assemble efficacious tools. To act consistently in the political terrain, that is, to assume responsibility for intervening in the historical process, one must make ethical commitments. Science is a dazzling human creation, but to a large extent it is conditioned by the society in which it emerges. The fact that in the 19th century very elaborate theories surfaced concerning racial differences is not totally divorced from the political expansion of some European nations. The social sciences help mankind to resolve practical problems of different types, but they also contribute to imposing the image of the world that prevails in a given society. In this way, they serve to ground the system of domination that they themselves legitimate. Therefore, it is natural that the structures of power try to co-opt the men of science and that the control of the direction of research should be the object of so many controversies. When I began my theoretical work, it was being thoroughly debated whether the politics of industrialization should be favored. Expressed in today's language: what are the best policies for development? Should an industrial policy be adopted or everything be confided to the market? The answer to these questions is not independent from identification of the social forces that control strategic economic decisions. During the first postwar years, the dominant social forces in Brazil were linked to the rural interests and to those of external trade. Yet the germ of an industrial nucleus already existed, circumscribed to certain areas only. I soon realized that the project of the nation's modernization would have to find support among those forces. My long life journey has thus been oriented by two principal reference points: the ethical acceptance of universal values, which transcend every form of parochialism, and confidence in the leadership of social forces whose interests correspond to those of the national collectivity. IMAGINATION "VERSUS" INSTITUTIONALIZED SCIENCE It should also be remembered that the fight which we unleashed in CEPAL was opposed to early "academization" of science, which ends by subordinating it to limitations that inhibit creativity: that which does not utilize certain language or adopt certain models remains disqualified, regardless of what it might have to say. Institutionalized science is always conservative. See any "first class" economics journal in English. Its selection criteria for the articles that it publishes display a visible ideological content. In Brazil, economics publications were, until the 1940's, in the hands of specialists. The first rigorously academic publication appeared in 1947: the Revista Brasileira de Economia, from the Getúlio Vargas Foundation (Rio de Janeiro). The orientation of this magazine, which essentially relied on translations of English and United States publications, was dictated by professor Eugênio Gudin,(4) who pursued a strict liberal orthodoxy. To challenge that current, in 1950 we founded Econômica Brasileira, a publication of an Economists Club, recently established, which brought together persons of "leftist" or simply "nationalist" leaning. It should not be forgotten that, over and above the debates between schools of thought or even ideologies, science always has to explicate unexpected problems, which elude social control. No society manages to completely escape the influence of its heretics, and nothing has had such importance in history as heresy. The truth is that there always emerge individuals disposed to fight for new ideas, risking positions of prestige and economic interests. I have two sons dedicated to research (one a physicist and the other an economist) and I know how difficult it is to obtain resources for that task, if one wishes to preserve their autonomy in the selection of the themes that will be investigated. Vanguard work always encountered resistances, within and outside of the universities. The emergence of the CEPAL was something so unexpected as to inspire perplexity. What is certain is that even in the agencies of the United Nations some forms of censorship were practiced. Discreetly, certain themes were prohibited. Certain works were disqualified by allegations that one was dealing with an "ideological" text. Thanks to the leadership of the Argentinian economist Raúl Prebisch,(5) a unique ambiance was established at that institution, which made possible the emergence of a new vision of the Latin American reality and, in exemplary manner, the Brazilian. It was then that it became clear that Brazil, which had become so very backward, had an available access road to modernity, and that this road was industrialization. Within Latin America, Brazil was the country that demonstrated the best conditions for industrialization and, perhaps because of this, was also the one that most had felt the absence of an explicit politics of industrialization. Thus, when that option was chosen, in the second government of Vargas,(6) the process was intensified, gained complexity and attained a vanguard position in the Latin American scenario. At the beginning of the Fifties I returned to Brazil, in the wake of an accord between the CEPAL and the BNDE,(7) which had just been established, to undertake a study of the prospects of the Brazilian economy and project its growth, which resulted in serving as a basis for Juscelino (8) to propound his Program of Objectives. At that moment, it comprised a vanguard investigation, for there had been no familiarity with the techniques of macroeconomic planning. I had researched that material in France and directed a CEPAL working group which prepared a manual of planning techniques, which was used for the first time. It dealt with a development strategy based upon the identification of the principal macroeconomic indicators and the structural bottlenecks, particularly those linked with relations with the exterior. At this time today resources are much more abundant and there is a greater number of educated persons, but, it appears, the possibility of innovating is less, of using the imagination. The economy keeps progressing in the pursuit of formalism, of the methods that brought glory to the natural sciences. Now then, the object of study of the social sciences is not something perfectly defined, like a natural phenomenon, but instead something evolved, which surges from the life of people in society. The social sciences acknowledge the evidence that human life is, in large measure, a process of conscious creation, which implies postulating the principle of moral responsibility. The heresies and heterodoxies play an important role in human history. A universal consensus invariably reveals that a phase of creative scarcity is being traversed. It is clear that in certain societies, the price that is paid for dissenting is very high. Yet the fact that there have been persons willing to offer up their lives in defense of ideas is an index of the important role that these occupy in social formation. I have the impression that in a society which has reached the Brazilian level of development, resources are available to finance research in diverse fields, if the researchers take care to preserve a certain degree of autonomy. The risk of bonfire is no longer active, as in Galileo's time, but instead that of allowing oneself to be co-opted or seduced by prebends. It surprises me that the subject of most actual relevance--that of social exclusion--does not have priority in the university programs. The truth is that a theory of structural unemployment has not emerged comparable to that for cyclical unemployment, which was studied in my era. There seems to be a direct relationship between opulence and conservatism in the society. I was exiled for a period in the United States, as a visiting researcher at Yale University. There I wrote a theoretical work about underdevelopment, that social phenomenon which is usually confused with backwardness and poverty. I led a conference on the theme with professors and researchers. I became satisfied that I had validated my argument. But the first reviewer spoke with frankness: "what he proposes is very interesting, yet I very much doubt whether he can obtain financing to accomplish an investigation on this theme. No reputable journal is interested in such matters." There was nothing more to say. I packed my guitar into the bag, as we say in my country. DISCUSSION OF THE ECONOMIC GROWTH OF BRAZIL People say that luck helps...the lucky. I have often been asked about the circumstances in which I wrote my most-read book: Formação econômica do Brasil.(9) When I went to work at CEPAL in early 1949, I gathered the available information concerning the Brazilian economy. I was quite surprised to verify that Brazil had a backward economy in comparison with others in Latin America. Argentina, whose population did not reach a third of Brazil's, had greater industrial production. The per capita income of the Hispano-american group, excluding Argentina, was much higher than that of Brazil's population. All this worried me, and comprised for me an intellectual challenge. Could it be that the Brazilian people were truly inferior, as many, inside and outside the country, maintained? Was there another explanation? Since the theories of ethnic inferiority and geographic determinism were already discredited, I returned my gaze to history. Could it be that the Brazilian ruling class had been incapable of putting the nation onto the path of industrialization from which modern civilization had emerged, beginning in the 19th century? Those who had clear ideas in this regard, like Mauá,(10) were overridden by the slaveholding landowners. When I began to consider these subjects, I brought the insights of modern social science, including macroeconomic analysis, and benefited from the discussions with Prebisch. What is important is that we think with our own minds, he would say to me. The work of Roberto Simonsen,(11) who organized a fine research team to gather quantitative information referring to the colonial period, assisted me a great deal in writing Economic growth of Brazil. I rediscovered Simonsen's book by chance. In 1957-58 I was at the University of Cambridge, England for a year, by invitation of professor Kaldor, to work on development theory. On the trip, the airplane had a malfunction that caused me to stay in Recife for a day or two. Wandering about the city, I entered the old Imperatriz bookstore and found a recent edition of Simonsen's book, which I had had occasion to leaf through ten years earlier, when preparing my thesis in Paris on the colonial economy of Brazil. I obtained it, to read on the plane. It was in this fashion, reviewing already published works, that I became aware it was possible to derive a model of the Brazilian economy using a perspective of centuries. The novelty consisted in incorporating historical evolution into the picture of the structural relations, beginning with the international. It was important to view Brazil, since its emergence, as an important actor in the world economic scene. Access to the Cambridge libraries helped me greatly in this attempt. To give an example: there I discovered a book, written in English and published in Buenos Aires, that contained little- known information regarding Brazil's international financial relations. I only found out later that this precious book had never been cited by any Brazilian author. I had to work tenaciously, but I could only dedicate mornings to the writing of the book. At the end of three months, I already had 300 manuscript pages that summarized ten years of efforts directed towards capturing that which was truly significant in the economic growth of Brazil. Luck was, once again, on my side, since when I went to send that mass of folios on their peregrination to Brazil, I ran into an English colleague who accompanied me to the post office. When I told him what I was doing, he made me aware of the risk I was running. After his advice, I went to the university's reproduction service. I left the originals and returned for them the next day. Without waiting to investigate whether the microfilm was well-made, I put the text in the mail. On the next day I left for a conference in Bursa, in Turkey. Upon my return, I found that the book had not arrived in Brazil. Over some days, the inquiry performed by the Royal Mail determined that the parcel had been lost in the Brazilian mail...for which they indemnified me a few pounds. Desperate, I went to the reproduction service to see if the microfilm was legible...It was! THE RULING CLASSES It was in the decade of the Thirties when the model of an "essentially agricultural" economy, defended by the Brazilian ruling class, began to be questioned. I was among the first who denounced ruralism as a cause of backwardness in the country. With its territorial extension and its social heterogeneity, Brazil's development could not depend upon extensive agriculture. What today looks obvious, a half century ago was the theme for heated polemics. The truth was that more than nine tenths of her exports were comprised of unprocessed agricultural products, and that the interests tied to exterior trade were those who ruled the country. Brazil did not completely lack industries. What it did not have was an industrial sector capable of generating its own dynamism. The rhythm of economic activity was determined from outside, that is, through the production of primary goods. The problem was not so much the dependence of growth on the importation of technologies and equipment, but the absence of a directing class capable of formulating a project to transform the nation. When I became convinced that the nascent industrial class could assume that historic role, I devoted myself to work on designing the instruments needed to implement this. The project of national transformation existed, in nucleus, in the heads of many people, especially in São Paolo. Yet the most developed thought, the most illustrious professors, were on the other side of the fence. I soon became aware that academic economic science created obstacles to the formulation of a politics of industrialization for Brazil, and that that doctrine did not lack external support. It displayed a veiled imperialism, which had to be confronted with extreme care so as not to awaken the "anticommunist" forces. I recall that, already as a CEPAL technician, I participated in a meeting of Latin American businesspersons that took place in Santos at the end of 1949. The central theme of discussions was the cost of the industrialization that took place in the countries of the region during the World War. The general opinion was that it would be good to return to traditional forms of development, supported by comparative advantage in international commerce. That was the adequate, universally accepted doctrine. In my interventions I referred, discreetly, to the benefits of taking advantage of industrialization opportunities. THE IMPORTANCE OF PREBISCH When I arrived at Santiago, Chile to work at CEPAL, having already lived in Europe, I had some notion of the importance of political aspects to economic reality. Yet it was not until Prebisch assumed the leadership of the Commission that I saw we had the possibility of doing truly important things. Prebisch had directed the Central Bank of Argentina during the Thirties, applying an anti- cyclical policy which gave him international prestige. When I read the first work prepared by Prebisch--which came to be known as the Manifesto--I said: "we have now the great lever that we needed to remove the great resistances that we face in Brazil." I acted immediately, translating the text into Portuguese, which appeared in Brazil before being published as an official document of the United Nations. Even more, I had it appear in Professor Gudin's prestigious personal effort, the Revista Brasileira de Economia. The reaction was not long awaited. The School of Economics of the Getúlio Vargas Foundation, where the masters of native liberalism pontificated under the tutelage of professor Gudin, invited a series of world celebrities of conservative economic thought to Brazil, with the purpose of restoring a "correct doctrine." Thus we had an opportunity to meet Lionel Robbins, Samuel Viner and many other luminaries. They attempted to clear away the intellectual effect of the CEPALine aberrations. This attempt caused the subject to be more discussed. If hard conservatism was defended with such diligence, it was because there were new ideas in the ring. The new ideas were simple, intuitive: the great accumulated backwardness could be remediated with the deliberate adoption of a politics of industrialization. This required the renewal of the ruling class. Up to now, it has not been elucidated how that transformation was accomplished in Brazil, but there is no doubt that the prolonged depression of the Thirties and the disruptions that the World War caused for foreign trade played their part. The two following decades saw the suicide of a president of the Republic, (12) and the attempt to impede his successor,(13) who insisted on the same political line, from taking control. At first, industrialization emerged as a subtopic of exchange rate policies, designed to defend coffee prices in the international markets. The experience had taught the Brazilian government that exchange rate stability was indispensable for the defense of the price of coffee. Selective control of imports, imposed to eliminate or reduce the deficit in the balance of trade, greatly favored the industrial activities to reduce the relative prices of imported goods and equipment. In a word, the opportunities to develop industrial activities in Brazil were so considerable that even measures precarious in this sense produced appreciable results. The first firm action in this direction was the establishment of the BNDES at the beginning of the Fifties. Prebisch's Manifesto had been published two years previously. EMERGENCE OF UNDERDEVELOPMENT In the era to which I refer, we took as given that economic development and its essential manifestation, industrialization, were necessary conditions to resolve the problems of Brazilian society: poverty, concentration of incomes and regional inequalities. But we were far from thinking that that sufficed as a sufficient condition. Therefore, frustration rapidly replaced the sensation of success that the initial phase of industrialization had brought with it. It would be a simplification to consider that the main cause of the change in the sense of history of the nation was the military coup of 1964, which came to substitute the objective of development (with priority on the social) with that of economic growth (generating inequalities and privileges within itself). And since the beginning of the Seventies, when I found that the social forces who fought for industrialization did not sufficiently appreciate the gravity of the country's social situation and tended to ally themselves with the latifundists and with the right against the specter of the incipient syndicalist organizations, I became aware that Brazil was a long way from emerging as a modern society. I defended, therefore, the idea that it had become necessary to deepen our perception of underdevelopment as a specific historical process, which required an autonomous effort at theoretization. I saw that the economic growth of the country somehow prevented the population from perceiving the grave social problems that were accumulating. The internal migrations created the sensation that everyone, or at least the majority, had before themselves the possibility of betterment, of social advancement. The same illusion appeared with the widening of the agricultural area by the depredation of the forest. My reflections upon this historical circumstance form the basis of what I called a theory of underdevelopment. Over various decades, I wrote a great deal on these themes. I am sure that there still remains much to explore. I hope that the new generation resumes the study of the particulars of the Brazilian historical experience. ROLE OF THE SOCIAL ORGANIZATIONS It seems to me that sufficiently clear ideas are still not held regarding the process of growing interdependence of the national economies that is called globalization. We live in an epoch when the insufficiency of the conceptual realm to explain a rapidly transforming reality becomes evident. Upon trying to distill the essence of the historical process that engendered modern civilization, we realized that, actually, what was important were not the ideologies nor, similarly, the technologies. If we use the language of the heretics of the past century, we would say that those were the tools used by the social forces who faced off in the class struggle. The social groups who directed the fantastic process of wealth accumulation defined the model of social organization within the limits established by the unsalaried classes. These gained growing importance as markets destined to absorb the flows of production. What might have been the evolution of the modern societies in the absence of syndical power, which attained its most advanced form in social democracy? It is enough to suppose that democratic society, open to individual initiative, would not have reached the preeminence that it has today without the sacrifices performed throughout the length of more than a century of social conflict. Today a new phase of that struggle exists. World political integration, which was establishing itself, reduces the reach of regulatory action by the nation-state upon which the syndicalist organizations were based. In consequence, the organization of productive activity tends to be planned on a multinational, and even world scale, to the detriment of the negotiating power of the working classes. For that reason the double process of unemployment and social exclusion has everywhere intensified on one hand, and concentration of incomes on the other. FUNCTION OF THE NATION-STATE One matter that should be studied in more depth is that of the evolution of that institution which occupied the center of the modern historical stage: the Nation-state, to which there corresponded in progressive fashion the defense of collective interests. From an agency defensive of patrimonial interests, the Nation-state evolved to assume the role of interpreter of the collective interest and guarantor of the materialization of the fruits of their victories. This process resulted from the growing participation of the population organized in the centers of power: that is, from the democratization of power. So then, through that process the growing organizational capacity of the working classes was discovered and, through that, the Nation-state, which ensured the population's level of employment through protection of the internal market. These question are manifested everywhere, and now are linked with technological advances and with the behavior of world political power. The importance of the behavior of this political power was put in clear relief in the recently concluded negotiations of the World Trade Organization over international flows of technology and financial services. The foregoing does not mean to say that the space for the exercise of national politics has disappeared. The challenges that Brazil confronts are those which correspond to a country-continent characterized by enormous social heterogeneity, yet with an economic system that still is relatively centered in an internal market of considerable dimensions and gigantic growth potential. Experience shows that the internal market is the motor of growth in the larger countries. Given that access to modern technology requires the opening of the internal market, the problem centers on the control of efforts designed in search of those two, to a certain point exclusive, objectives. By this logic, the role of the State, in developing countries like Brazil and in a world in transformation like that of today, tends to be ever more complex. Thus, the leading problems are of a political nature. It is necessary to abandon the idea that, with the end of ideological confrontation, problems will be solved by themselves and the route to the future is already traversed. We live in an age that favors the political function, the most noble of human creative activities. It is important that the new generations recapture an appreciation for the exercise of the imagination and convince themselves that their responsibility is no other than that of giving continuity to the construction of this great nation. II. THE NEW CAPITALISM ANY reflection concerning the legacy of CEPAL should begin with the recognition that a unique effort was effected in it to create a body of theoretical thought concerning the political economy that has emerged over a vast area of the planet and which is called the Third World. This work of theoretic construction is developed in two aspects. On one hand, the vision of the overall structure of the world economy, beginning with the dichotomy between center and periphery, which allowed the specificity of underdevelopment to be captured and the Rostowian doctrine of the stages of economic development to be superseded, which ignored the qualitative differences between the structures of development and of underdevelopment. On the other, the perception of the system of power underlying the world economy, which provided an explanation for the tendency towards deterioration in the relation of exchange prices in the international markets. In actuality, it involves a theory of the forms of domination that are found in the origins of dependency to which the Latin American economists will allude below. Those two ideas shed light, from different angles, on the phenomenon of power in the world economic structures, a fact almost completely ignored by the conventional economic theories, which rely on the concept of equilibrium. Thus, CEPAL represented an effort towards restoration of economics as a branch of political science, which can be explained by the influence of Keynes over Prebisch and of Marx over some of the most energetic youth who worked in CEPAL. The analysis that follows of the transformations of the world economy are based on the historical-structural vision which emerged from the initial labors of CEPAL. The historical process of economic formation of the modern world can be examined from three viewpoints: a) the intensification of the effort of accumulation, through the elevation of the levels of saving of certain communities; 2) the widening of the horizon of technical possibilities; and 3) the growth of sectors of the population with possibilities for access to new customers for consumption. We do not deal with three distinct processes, but instead with three facets which interact in the same historical process. It is not difficult to see that, without the technical innovations, the increase in savings would not lead very far, while the amplification in the population's buying power is an essential element for the dynamic reproduction of the system. At this turn of the century, the ideas prevail that, independently of the policies that one or another nation decides to follow, the process of globalization of markets must impose itself upon the entire world. We confront a technological imperative, similar to that which governed the process of industrialization, which molded modern society during the last two centuries. Now then, the interconnection of the markets and the subsequent weakening of the existing systems of state power that circumscribe economic activities, allow for important structural changes, which translates into a growing concentration of income and in forms of social exclusion that are manifested in every nation. There are even those who consider that these adverse consequences are the conditions for a new type of economic growth, whose characteristics are not yet defined. Thus it is, at this century's end, that economic growth acquires as its counterpart the birth of a new form of social organization which redefines the profile of income distribution. In this simple conclusion one can detect a threat or a challenge. At the least, the advent of an epoch of uncertainties. Reflecting upon the first Industrial Revolution, it can be seen that it also opened the way to unemployment, principally in the agricultural sector, which traditionally employed more than two thirds of the workers. Since development only becomes effective if an economy has access to expanding markets, one must explain how the markets were widened in the wake of a technological revolution that generated a diminution in workforce demand and in incomes of the set of workers. It is known that during a first period, enterprises in the nations that headed the Industrial Revolution forced the opening of external markets, which explains the imperialist offensive that occurred throughout the 19th century. Nevertheless, the true motor of that economic growth was not so much the dynamism of exports, but instead the amplification of internal markets, derived from the increased buying power of the wage earning population. This explanation in turn relies upon the framework of conventional economic analysis, given that it is factors of an institutional and political nature that determine the distribution of income. In effect, it makes one think that if the logic of the markets had prevailed without restrictions, the internationalization of economic activities (the process of globalization) would have appeared much earlier, reproducing, in an exaggerated form, the experience of England, where the share of external commerce in the national income surpassed 50 percent during the Seventies of the 19th century. That would have brought about a lesser geographic concentration of industrial activities, which would have favored the peripheral nations. Furthermore in this hypothesis, it would have caused a much greater social concentration of incomes in the principal nations of the Industrial Revolution. But events did not follow this path. In fact, a greater geographical concentration of industrial activities prevailed, which benefited the central nations, along with a more equitable income distribution in those same countries--which represent the technological vanguard--which brought with it the adoption of the politics of social protection. The explanation for this historical picture is found in the advance of new social forces, which appear at the same time as the process of urbanization generated by industrialization itself. The evolution of the system of power, a consequence of the action of organized workers, carried with it the elevation of real salaries and obliged governments to adopt protectionist policies to defend their respective internal markets. In this fashion, and starting at that moment, the motor for growth was the amplification of the internal market, with a subsidiary contribution from exports. In this fashion, the increase in buying power of the working class played a central role in the process of development, only comparable to that of technical innovation. Thus, the dynamism of the capitalist economy was the result of the iteration of two processes: for one, technical innovation--which translates into increased productivity and reduction in the demand for the force of labor--and, for another, the expansion of the market - which grows pari passu with total income. The importance of the first of these factors--technical innovation--depends on the actions of businessmen and on their efforts to maximize their gains, while the importance of the second-- market expansion--reflects the pressure from social forces that struggle to elevate their incomes. The actual process of globalization disarticulates the synchronous action of these two forces, which in the past guaranteed the dynamism of the national economic systems. In the degree to which enterprises globalize, to the degree in which they escape the regulatory action of the State, they tend to support themselves more in external markets to sustain their growth. Simultaneously, the initiatives of the businessmen tend to escape control by the political segment. They return in this way to the original model of capitalism, whose dynamism was based on exports and in external investments. In sum, the tripod that gave sustenance to the power system of the nation- states is found clearly destabilized, to the detriment of organized workers and in favor of the businesses that control the technological innovations. The equilibrium that the regulatory action of the public authority guaranteed in the past no longer exists. The foregoing explains the reduction in the wage earners' share of the national income in every country, independently of their rates of growth. The ever greater interdependence between the economic systems rendered the techniques they had used for development obsolete during the last decades, to give a sense of the historical process in which the world is immersed. The vertiginous advance of data processing technology permitted a diversity of models. But the reliability of the forecasts practically disappeared. It is enough to cite, as an example, the exercises performed regarding the projections of international commerce in the following years in order to ascertain the outcome of the accords debated in the original GATT. Thousands of equations were processed without it being possible to elucidate any important doubt. Subsequently today, the possibility of interfering in the macroeconomic processes is most limited, as verified even by the best equipped governments, impotent to confront a problem like unemployment. The limited transparency of the actual outcomes reflects the action of new elements and change in the relative importance of others, which involves an acceleration of historical time. The national economic systems that subsisted in grand autonomy and only occasionally were subject to external collisions are a thing of the past. The principal markets--for technology, financial services, communication media, quality products and even goods for general consumption, not to mention those for traditional primary materials--operate today in a unified manner or march rapidly towards globalization. We examine some of the changes of greatest relevance in the configuration of today's world panorama: 1. The decline in the governability of the economies of greatest relative weight cannot be explained without keeping in mind the internationalization of the financial markets. The enormous disequilibrium in the current account of the United States balance of payments is a case of escape into the future, in search of adjustment to that globalization, and it translates into the transfer to that nation of a considerable part of the savings available for investment in the rest of the world, including the poorest countries. This situation leads to important modifications in that nation's international relations, as demonstrated in the recent creation of a zone of free commerce that groups the markets of the United States, Canada and Mexico. With that, North American industries may be able to recover international competitiveness, given that the monetary salaries in Mexico are equal to no more than a tenth part of those that prevail in the United States. The experience of integration with Mexico, excluding the mobility of the workforce, will serve as a model for a wider project, capable of embracing the whole continent. 2. The European Union was born at France's initiative, with the principal goal of promoting a durable political understanding with Germany. Four decades later, it was the origin of a formidable project of political engineering. For the first time, an important group of sovereign nations, with their own cultural profiles, renounced national prerogatives so as to integrate themselves politically and economically. In the past, multinational integration was achieved by the domination of the strongest over the others. The European process requires, now, an exercise in political imagination that reconciles the resurgence of local values and cultural rivalries with the growing requirements of a unified economic space of colossal dimensions. The European Union, conceived in the past as a political project--to confront the perceived Soviet threat and to overcome historic rivalries--acquired a powerful impulse on the economic plane and is, easily, the most important experiment in transcending the Nation-state as an instrument of regulation for human coexistence in a democratic environment. 3. The process of transition to a market economy and of establishment of democratic institutions in the nations of eastern Europe became much more traumatic than what had been imagined. Everything leads one to suppose that in Russia, which confronts the challenges of reconstructing a vast political space with enormous ethnic and cultural diversity, that process will be very prolonged. It is probable that, for one or two decades, Russia will remain at the margin: a world apart, and must invent the political format that would permit it to reconcile its authoritarian traditions with the claims of democratic practice, predominant today in an ever more differentiated middle class. Despite its immense resource potential, including qualified human resources, everything seems to indicate that Russia will not greatly influence the configuration of the world at the beginnings of the 21st century. 4. Without room for doubt, it is the nations of east Asia--China, in particular--to whom it falls to delineate the shape of the new series of transformations redefining the face of the planet. Headed by Japan, those nations have obtained a high grade of autonomous technical dominance, which they place in the service of major social discipline. Salaries are regulated according to the requirements of international competition. The unparalleled competitive strength of Asiatic capitalism emerges from this strict social discipline and from investments in the development of human resources. It should be expected that, given the enormous workforce reserves available to them, their economies should gain weight, progressively, in world markets. The barriers against this invasion occur through new forms of organization of the markets, which introduces product differentiation. Areas will be ever more limited where competition is effected through prices. The stock market crisis at the end of 1997 made plain the weight that east Asia already has in the world market and the importance that the investments in this region have for the dynamism of the eastern economies, at the same time that it placed in evidence the political immaturity of their ruling groups. 5. The Latin American economies will see themselves subjected to growing pressures to deregulate their markets, with effects determined as a function of their level of heterogeneity of their social structures. By not achieving reversal of the process of concentration of income and the consequent aggravation of social exclusion, nations such as Brazil and Mexico will be exposed to social tensions that could well propel them into ungovernability. The search for new development paradigms, oriented to preservation of non- renewable resources and to the reduction of waste, is going to carry out a role in Latin America equal to that performed, in the first half of the century now ending, by the European social utopias. In short, with tariffs substantially eliminated as an instrument of commercial policy and with a progressively unified global financial market--in which the cost of international transfers of capital tends toward zero--we enter into a new phase of capitalist development, whose characteristics are still to be defined. Some of those to be profiled can already be indicated: the maladjustments caused by the social exclusion of ever wider groups of the population tend to become the most serious problem, as much in the rich nations as in the poor. Those maladjustments not only emerge from the nature of technological progress, but also reflect the indirect incorporation into the productive system of the badly paid labor in late industrializing nations, primarily, the Asiatic. Globalization, on a world scale, of productive activity necessarily leads to a great concentration of income, which is the counterpart of the previously mentioned social exclusion. Therefore, the new challenges are of a fundamentally social, more than economic, character, as opposed to what occurred in the previous phase of the development of capitalism. And so, the first stage shall have to be handled with political imagination. Whoever thinks that the space for utopia is exhausted is mistaken. Contrary to that which Marx prophesied, the administration of things will be substituted, increasingly, by the creative governance of humans. III. GLOBALIZATION AND NATIONAL IDENTITY THE PROCESS OF GLOBALIZATION The changes that occur in international relations, at this end of century, cannot be understood except with a composite vision, a global vision, that bases itself not only in economic analysis, but also in that prospective imagination that allows considering the future as history. In the absence of that enabling vision, it will be impossible to even understand the meaning of the daily events that directly concern us and, lately, it will be impossible too to act in an effective way as the subjects of history. Keeping this concept in mind, I present some reflections below upon the world reality that is emerging before us, with the goal of tackling, further ahead, the problems which demand our attention in the most insistent manner. 1. The fact cannot be ignored that the world economy has entered into a period of structural tensions which, by their global reach, have no precedent. From the beginning of the Eighties, those tensions have been felt by the nations of the Third World, beneath the rubric of a violent increase in interest rates in international markets and in a powerful transfer of capital towards the United States that, in and of itself, explains the bonanza experienced by that nation beginning in the second half of that decade. The apex of the tensions in the world economy is found in the virtual inflation of the American economy, inflation caused by the long-term decline in the savings rate, combined with a copious deficit in the current account of the balance of payments. The reduction in the savings rate is a result of the convergence of the negative disequilibria in the accounts of the federal government, added to a sustained reduction in private saving. In effect, during the Eighties the savings rate in the United States was reduced to half its observed magnitude in the three preceding decades. Its actual level is equivalent to less than a third of the average savings rate of the nations of the O.E.C.D. and less than a fourth that of Japan. In consequence, the United States ceased to be the principal creditor and provider of capital to the world, while becoming the principal debtor. Its external debt in fact exceeds a billion dollars. 2. The existence of that structural imbalance in the United States economy explains the absorption by that country of more than half of the savings available for international investments.(14) It is very probable that that disequilibrium shall still persist for some years, and the way in which this problem is solved will considerably influence the future configuration of the structure of world power. The tension present in the primary economic center brings about realignments of forces in Latin America, a region that is undergoing a crisis phase in its political structures, with consequences difficult to foresee. 3. Another important source of tension is the widespread process of destruction and reconstruction of the eastern European economies, who continue to absorb part of the savings generated in other countries, without having the ability to sufficiently remunerate that capital and contributing to keeping interest rates at elevated levels. As opposed to that foreseen during a beginning moment, that process will be extended in time and could last several decades. The fall in production levels, which was 4.5 percent in 1990 and that in the following year reached 15.4 percent, has persisted for some years. The process of institutional change is very profound and opens enormous possibilities for the participation of international capital. The nations of eastern Europe control human resources that place them in an advantageous situation in the competition with the countries of the Third World. It leads one to think that, once the stage of institutional reconstruction is surpassed, a new an dynamic area of capitalist development will be opened in that region. This thorough process of economic reconstruction, which includes the eastern portion of Germany, reinforces the tendency toward increases in the interest rates, to the detriment of the economies of the Third World. 4. The integration of the nations of western Europe is an irreversible process, although the ambitious objectives of the Maastrict treaties are not reached. At the same time that this process strengthens the big economic groups who act on a transnational scale, it opens space for the agents who operate in social realms distinct from the specifically economic or financial. The weakening of the instruments of political economy will stimulate compensatory actions in other areas for the exercise of political imagination. In western Europe is occurring the most important experiment to transcend the Nation-state as the guiding instrument for economic activities in societies which reconcile the ideals of liberty and of social well-being. The foregoing requires the conquest of a growing social homogenization, difficult to achieve due to the existing orientation of technical progress. 5. In a manner independent of the changes in the configuration of the world structure of political power, the redeployment of productive activities will continue its course, governed by the effects of the new techniques of communication and of information processing, which tend to concentrate creative and innovative activities including those that are instruments of power in privileged areas of the developed world. 6. Everything indicates that the advance of transnational enterprises will continue on, as a result of the growing concentration of financial power and of the agreements over patents and control of intellectual property reached with the aid of the World Trade Organization, with these factors contributing to the increased breach between developed and underdeveloped countries. 7. The advance in the internationalization of the economic, financial and technological pathways weakens the national economic systems. The activities of the United States tend to be limited to the social and cultural sectors. The nations characterized by acute cultural and economic inequalities will be subjected to growing dislocating pressures. The counterpart of the dominance of internationalization is the weakening of historic links of solidarity which, in the case of certain nationalities, have kept countries marked by acute social disparities of living standards united. 8. International political cooperation will facilitate attention to problems in the preservation of environmental balance, the control of drug use, the battle against contagious illnesses, the eradication of hunger, and the maintenance of peace. As the economic domain tends to be increasingly occupied by internationalized enterprises, they are ones that limit the space corresponding to activities of local reach and of an informal nature. The relative importance that these latter attain will determine the level of development in each region: there will be a structural overlap of the developed and underdeveloped areas, in a division of political space that perpetuates the social inequalities. 9. The world power structure evolves towards the establishment of great blocs of nations among those with headquarters of transnational enterprises, with rich heritages of knowledge and skilled personnel. The growth of international exchange of services, especially financial and technological, occurs to the detriment of commerce in traditional goods. In the dynamic of this system, forces prevail which tend to reproduce the actual development- underdevelopment dichotomy. To escape from this set of forces, globally articulated, it is necessary to unite political will, based upon a wide social consensus, with objective conditions that, in fact, are present in only a few countries of the Third World. PRESERVATION OF NATIONAL IDENTITY It is well to ponder those global structural readjustments that are now occurring, with the goal of being able to identify the space Brazil will have for deciding among its historical options, without abandoning the singularities that characterize it. The challenge consists in finding an effective way of preserving cultural identity and political unity in a world dominated by transnational groupings whose power is derived from the control they exercise upon technology, information and financial capital. To respond to it, it is necessary to deeply understand the reasons for the loss of dynamism in the Brazilian economy during the last two recent decades. The Brazilian experience of economic development was the result of the expansion of an internal market that proved to possess enormous potential. Far from being a mere continuation of an economy exporting primary products inherited from the colonial era--consistent with a constellation of autonomous regional enclaves--industrialization assumed the form of a progressive construction of an economic system that operated with considerable autonomy with regard to the creation of savings and the generation of effective demand. Thanks to the effects of that synergy, this system was greater than the sum of the parts which comprised it. From this situation, even without having benefited from a privileged position like the United States one hundred years previously--with great inflows of capital and with a technically qualified workforce deriving from the most developed countries of Europe--Brazil, between the Fifties years and the beginning of the Seventies, was the most rapidly expanding industrial zone in the capitalist world. During three centuries, the Brazilian economy based itself on the extensive utilization of natural resources, many of them non-renewable: from forestry exploitation during its historical beginnings, up to the great iron mines, and passing through the destructive use of the soil over various agricultural cycles. Brazil for a long time was, in fact, an excellent example of what is now called "unsustainable development." With an exploitative civilization, the nation was condemned to confront an immense crisis when the exhaustion of the base of non-renewable (or renewable at increasing costs) resources should arrive, or when international demand for those resources would diminish as a function of the effect of new technical or economic factors. It is only during the present century that the Brazilian economy stops basing its dynamism on the depredation of its natural resources and begins to base it, principally, upon adoption of technological advances and on the accumulation of capital capable of reproduction. That was due to the process of industrialization, which became the nation's motor of development beginning with the Great Depression of the 1930's. Brazil established the basis of its industrial system in an epoch of great international disruptions, and the decisive role in the strategy that then was adopted fell to the State. The sacrifice imposed on the population spanned all social classes, even the groups who were accustomed to having access to imported consumption goods. Throughout several decades, the nation restructured itself, lowering the share of imports in the offerings of consumption goods, at the same time that the population grew, especially in the urban zones. It began to delineate a new social reality: the rich consuming nationally manufactured products stopped being seen as beings from another planet, and the developing middle class occupied greater space and assumed leadership positions in the nation's cultural life. At the outset of the Seventies, the external surroundings that had favored industrialization changed radically: the crisis of the dollar, following the first oil shock, gave birth to an enormous mass of international liquidity and to reduced interest rates, which stimulated the process of excessive indebtedness of a large number of nations in the Third World. What came after was the sorrowful history of the successive adjustments imposed upon the debtor nations: from recipients, these were turned into net providers of international capital and found themselves forced to increase their effort to save and to reduce their level of internal investment. This type of adjustment requires the existence of a consensus and of a social discipline difficult to attain in any society, but more in those, like the Brazilian, in which profound inequalities and political backwardness coexist. Therefore, the real crisis, which already extends over two decades, feels insuperable and places in relief the incapacity of the State to confront it. It would only be justified to increase the effort to deepen the external insertion of the economy--that actually is considered a requisite for modernization--if such an effort were made within the framework of a genuine politics of economic and social development, which does not occur when the increase in exports has as its counterpart the contraction of the internal market. It is never pointless to keep in mind that prices--in real terms--of primary products exported by Third World nations follow a declining historical trend. The average of those prices, during the period 1986-1990, was equal to approximately half of that which prevailed forty years earlier, that is, in 1948-1955. A study by a group of analysts in the World Bank (published in The World Bank Review of January 1988) arrived at the conclusion that this deterioration has already lasted more than a century and continues to intensify. Between 1989 and 1991, the average price of primary products exported by the poor countries was reduced by 20 percent, a fall that is close to what occurred in the recession of 1980-1982, which provoked the external debt crises in those nations. Trapped in a harmful process, many poor nations tried to compensate for the decrease in prices by increasing the volume of exports and obtaining external financing, including from multilateral agencies, to elevate production. The resulting violent competition provoked the downfall, in recent years, of many producers of coffee and cocoa. The incomes earned by the coffee producers were reduced by half, and the losses for cocoa and sugar were even greater, as a result of the dismantling of the timid mechanisms to defend existing prices from the period prior to the deregulation boom. The double pressure of the increase in the supply of labor, stemming from population growth, and the rigidity of demand for primary products in the international markets led the peripheral countries, in the past, to try the path towards industrialization. However, only a few of those countries united the necessary minima of scale of population, endowment of natural resources and business leadership to allow basing industrialization upon their internal market. The great majority of the poor countries who tried to industrialize continued to depend on marginal access to the international markets, as subcontractors for the transnational enterprises. There were few who progressed in the building of an economic system with a certain degree of autonomy in the generation of effective demand and in the financing of reproductive investment. The barriers to access to international markets that those nations encountered are not limited to the deterioration of real prices for their primary export products. That tendency, identified by Raúl Prebisch a half century ago, can be explained by the very nature of those goods, whose relative importance declines with increase of the population's income level. The difficulties that the poor nations confront in their efforts to penetrate international markets are more severe than the first students of underdevelopment, who limited themselves to observing the nature of the products without examining the structure of those markets, supposed. There is reason to believe that in such markets the manifestations of that which is understood as market power have considerable importance. It should not be forgotten that, in what is referred to as manufactured products, international transactions are constituted, in general, by operations performed within the large corporations and under regimes of administered prices. A study by the South Commission (15) demonstrates that, during the 1980's, the prices of exports manufactured by the nations of the Third World grew by 12 percent, measured in nominal dollars. During that same decade, on the other hand, the prices of manufactures exported by the developed nations increased 35 percent. If one calculates the buying power of manufactured goods exported by Third World nations, taking account of the prices for machinery and equipment that they imported, he notices that, over the same decade, that buying power was reduced by 32 percent. In this way, the poor countries require greater efforts to conquer the space for manufactures in the international markets. It is indubitable that development is not possible without access to modern technology, and that access is obtained, above all, through the route of international commerce. Yet what happened in the past, in a nation with the potentialities of Brazil, was that access to the international market had only a supporting role in the unfolding of development, since the central impulse was internally generated. If it is admitted that the Brazilian economy will only recover its dynamism with difficulty by supporting itself basically with external relations, correspondingly one must determine if it has not committed an error by abandoning the strategy of considering the internal market as the "engine of growth." I do not claim that that abandonment may have been deliberate or even conscious. We reflect, instead, upon changes as much transitional as structural in the international economy that could not be confronted with decision and imagination. A decade was lost, through whose length the capacity for self- government available to the nation greatly deteriorated with the reduction in efficacy of the instruments for macroeconomic policy. The space for maneuver was found to be limited by the compromises struck with international creditors: the club of creditor banks and the IMF. The economic systems of great territorial scope and marked regional and structural disparities--among what distinguishes Brazil, China and India-- survive with difficulty if they lose the cohesion that derives from expansion of the internal market. In those instances, however effective they may be, international projection is insufficient to ensure the dynamism of their economies. In a world dominated by the transnational corporations, those heterogeneous systems only survive and grow as a function of political will based upon a project with deep historical roots. A theory for economic development of the large heterogeneous--socially or culturally--economic systems has still not been formulated. The disaster of the Soviet Union left it very clear that such systems can no longer survive having the structures of bureaucratic and military control as their only support. While during the prolonged historical period of the primary export model the economic links between the diverse regions of Brazil were very scarce, at mid- century beginning with the Thirties strong links of interdependence were established between those regions thanks to the considerable economic growth, supported by an industrialization based upon the internal market. One can not ignore that the dynamism of the internal market was based, in large measure, upon activity in Brazil of foreign enterprises, but it was done in an epoch when international competition for sources of capital was much less intense than what it now is, and in which the external debt of the nation was much less. For that reason, the first challenge that Brazil should now confront is that of increasing its capacity for self-financing, which requires a greater savings effort, public and private, and greater discipline and transparency in the use of the foreign currency generated by exports. It is indispensable to emerge from the recession so that a greater savings effort and greater social discipline shall be viable. In other words, it is necessary to better utilize the productive capacity that already exists. For that it is necessary to re-establish the efficacy of the instruments of macroeconomic control, cleansing the public finances and regulating monetary flows and external financiers. In Brazil, efficacy of governmental action begins with the ability to regulate the foreign sector of the economy. At the middle of the 1990's, with the Real Plan, the Brazilian government once more based policies of stabilization (of prices and of the type of exchange) upon a growing external indebtedness. All the great Brazilian crises were started with exchange rate problems. It remains to be seen whether, in fact, it is still possible to regain the ground lost in this vital area. At the least, the conclusion may be that it is already inappropriate to speak of Brazil as an economic system. IV. OVERCOMING UNDERDEVELOPMENT WHEN human creative capacity is applied to the discovery of our potentialities and the project of enriching the universe, that which we call development results. Development only appears when accumulation leads to the creation of values that are spread among the collectivity. The theory of development alludes to two processes of creativity. The first has to do with technics, with the attempt by man to utilize instruments to amplify his capacity for action. The second refers to the significance of human activity, to the values with which humanity enriches its existential patrimony. Industrial civilization is characterized by the fact that human inventive capacity is channelized in a preferential manner towards the creation of technology; this is, towards the opening of new pathways for the accumulation process, which explains the formidable expansive force of such a civilization. It explains too the fact that the central point, dominant in the study of development, should have been the logic of the process of accumulation. But it was the rejection of a simplistic vision of the process of the geographic diffusion of industrial civilization from which emerged the theory of underdevelopment, whose essential objects of study are the social malformations engendered during this diffusion process. The denunciation of the false neutrality of technology placed in relief a hidden, yet determinate, characteristic of the development process: the definition of its objectives, the creation of substantive values. The theory of underdevelopment makes clear the limitations imposed on the peripheral nations by the international division of labor, a product of the particular form by which the diffusion of industrial civilization was produced. The first step consisted of awareness that the principal obstacles that impeded the transition from simple imitative modernization to authentic development corresponded to the social sphere. The advances in accumulation did not always open into transformations of the social structures to allow substantive modifications in the distribution of income and the allocation of the new surplus. While in the central economies accumulation led to scarcity of labor power, which created the conditions for social pressures to emerge that favored the elevation of real salaries as well as social homogenization, in peripheral ones the effects were completely different: it led to social marginalization and reinforced traditional structures of domination, or replaced them with similar others. In fact, peripheral accumulation was in the service of the internationalization of markets that brought with it the diffusion of industrial civilization. The concept of technological dependency permits articulation of the diverse components contained in this problem. Technological development is dependent when it is not limited to the assimilation of new techniques, but instead imposes acceptance of consumption patterns, under the rubric of new final use goods that represent a level of accumulation and of technical advance which, in the society in question, only exist in the form of enclaves. A better comprehension of this problematic allowed the formulation of certain questions and the opening of new lines of reflection upon underdevelopment. Does the possibility exist of acceding to the vanguard technology of industrial civilization and, at the same time, escaping from the logic of the existing system of international division of labor? Or, better put, up to what point can technology be placed in the service of reaching goals, defined in an autonomous fashion, of a society whose level of accumulation is relatively low and which hope to achieve social homogenization? Technological dependence - might it perhaps be a simple consequence of the acculturation process of the dominant groups in the peripheral economies? Is it possible to have access to modern technology without submitting to the world leveling process of values imposed through the dynamics of the market? Is it possible to avoid the system of incentives, required to reach the efficiency levels that characterize modern technology, engendering growing social inequalities in the countries with a low degree of accumulation? The reflections provoked by all these issues have permitted a better delineation of underdevelopment as a field of study. On one hand, it shows the demands of a globalization process, imposed by the logic of the markets, which comprises the basis for the diffusion of industrial civilization. On the other, it depicts the requirements of a technology that is the result of the history of the central economies and which exacerbates its initial tendency to limit generation of jobs. Finally, it includes the specifics of the most apt social forms to operate those technologies, that is, the organizational forms for production and manpower utilization that tend to limit the possibility of systems of centralized decision-making recurring. The overcoming of underdevelopment requires an attempt to respond to these multiple interrogations. What must be sought is to discover the road of creativity in relation to the goals, taking advantage of the resources of modern technology to the extent that they are compatible with the preservation of autonomy in the definition of substantive values. Expressed in other words: how to obtain effective development beginning from a relatively low level of accumulation, keeping in mind the social distortions imposed by the international division of labor and the restrictions established by the globalization of markets. How to attain access to modern technology without falling into forms of dependency that limit autonomy of decision and frustrate the objective of social homogenization. The most significant attempts to overcome underdevelopment in the second half of the 20th century correspond to the following three models. 1. COLLECTIVIZATION OF THE MEANS OF PRODUCTION This first model was based upon the collective control of the most important economic activities, whether at the level of the productive unities (self- management) or at the level of the nation set (central plannning) or also in ways that combine both modes of collective organization of the economic system. The roots of the collectivization project are found in the Marxist doctrine. On the one hand, it appears evident that the prevailing forms of social organization in the peripheral countries leads to an acculturation of the dominant minorities, those who integrate the internal structures of domination with the external and, consequently, exclude the majority from the benefits of the accumulation effort. And thus economic growth does not lead, by itself, to development. On the other hand, it seems certain that market logic does not compel the structural changes required to defeat the inertial factors that are opposed to development of the productive forces in conditions of low levels of accumulation. In actuality, this logic favors international specialization based on the criteria of static comparative advantage. So then, the surplus derived from that specialization, retained locally, stimulates dependent modernization, which goes on to condition the process of transformation of the productive structures that comes later. The industrialization that emerges from dependent international specialization reinforces the pre-existing social structures. If the collectivization is founded upon self-management, strong pressures to elevate consumption may arise, which reduce the margins for reproductive accumulation. If, otherwise, the point of departure is centralized planning, the emergence of a unifying bureaucratic power tends to provoke a growing breach between the decision centers and the masses of population and, ultimately, to create new structures of privilege. Furthermore, problems exist specific to the operation of an economic system ruled by centralized decisions. Theoretically, it is possible to plan the activities of a discrete group of productive unities considered as a single system. But full collectivization transforms that theoretical possibility into a practical necessity. The difficulties that exist in executing the plan are greater the lower is the level of development of the productive forces. In synthesis, experiences with collectivization of the means of production encountered difficulties stemming from three categories of problems: a) that of social organization, which follows from the definition of priorities for the allocation of scarce resources; b) that of the system of incentives, which reconciles the improved performance of the productive activities with the distribution of income that is considered desirable, and c) that of insertion into the international economy, which ensures access to technology and to financial resources on the border of dependency relations. 2. PRIORITY TO THE SATISFACTION OF BASIC NECESSITIES Another way that those intent on overcoming underdevelopment have adopted has been that of giving priority to satisfaction of the set of necessities which a given community considers fundamental, even when those are not found perfectly defined and identified. It starts from evidence that late penetration by industrial civilization brings with it modes of social organization that exclude important segments of the population, if not the majority of them, from the benefits of accumulation. The solution of this problem is of a political nature, and demands that a part of the surplus be destined to modify the profile of income distribution in a deliberate way, such that the population group have the possibility of meeting their basic needs for food, health, housing, education, etc. This problem is not one that is present exclusively in the backward nations, although is those it is manifested with undeniable gravity. There is no doubt whatsoever that if a portion of the product increment in an economy is devoted to eliminate what is conventionally called absolute poverty, it would disappear at the end of a certain time. That goal can be reached, however, in various manners: from structural reforms, like the reorganization of the farming and livestock sector with a view to a real increase in basic salaries, to the introduction of compulsory measures capable of assuring reduction in the consumption levels of the highest-consuming groups without provoking negative effects on the magnitude of the interest rate. The greatest difficulty that is confronted is that of generating a political will capable of placing a project of this type in motion, for mutual conditioning exists between the structure of the productive system and the profile of income levels. Modification of the relationships between both can carry a considerable social cost, not only in terms of the obsolescence of the physical plant, but also in immediate unemployment. We deal, therefore, with a more complex operation than it appears to be at first sight. Problems also arise in the area of external relations. The underdeveloped economies that industrialize with the participation of the transnational companies use technology and even equipment that was already amortized in the countries of origin of those corporations. The redirecting of the productive systems to accord with less elitist consumption patterns can cause new disruptions, which elevates the costs. In this approach, a perverse effect is produced: the technology required to satisfy the needs of a population of low income level may be more expensive, given that it would replace another which, although more advanced, has an opportunity cost equal to zero for the company that uses it. 3. INCREASE IN EXTERNAL AUTONOMY A third strategy for overcoming underdevelopment consists in assuming an aggressive position in international markets. Investments are channeled toward the sectors that, potentially, possess external competitive capacity and which, at the same time, stimulate national activity. The latter permits them to foment the expansion of the internal market. Exports are supported by economies of scale and by technological advances more than by static comparative advantage. The success of this model depends upon export activities retaining their vanguard position, as much in process technology as in the products. It is this vanguard position that gives flexibility and adaptability to the export activity. This strategy can be affected if the transnational enterprises control the productive activities, for that would limit the capacity for action in the external markets. The principal trait of this model is the conquest of autonomy in relations with the exterior. It permits overcoming the situation of dependency and passivity imposed by the traditional system of the international division of labor, and adoption of an offense in a position founded on control of certain advanced technologies and on commercial initiative. This model requires selective and careful planning and the attainment of a high rate of savings. The problem that arises from the beginning is identification of the social bases of the structure capable of putting it into practice. This explains how a strategy of this type can frequently lead to reinforcement of state structures of an authoritarian cast. The three strategies examined above encapsulate the experiences lived in the second half of the century by the peripheral economies who adopted voluntaristic development politics. The point of departure was, in every case, the critique of the way in which industrial civilization was spread; from the situations of dependency deriving from the international division of labor, and from the social malformations generated by the logic of the market in the peripheral nations. The tactical goal was always to win autonomy in the ordering of economic activities, with a view to reducing the social inequalities that the propagation of industrial civilization causes, in an apparently inevitable manner, in the peripheral nations. The strategic objective is to achieve a development that translates into enrichment of the culture, in its multiple dimensions, and to permit contributing with their own creativity to that civilization which tends to extend itself over the entire world. At root, it involves an expression of the desire to preserve their own identities in the common adventure of the civilizing process. The experiences mentioned make clear that, in the world of today, the nations of the periphery who hope to overcome underdevelopment should comply with certain conditions, among which we distinguish the following: a) a level of decisional autonomy that permits limiting as much as possible the flight to the exterior of investment potential; b) that power structures which make it difficult for this potential to be absorbed by patterns of consumption through the processes of reproduction in the rich countries, and that assure a relatively high investment level in human resources, which is what opens the road to social homogenization; c) a certain degree of decentralization of business decisions, necessitated in order to be able to adopt an incentive system capable of ensuring utilization of the productive potential, and, d) social structures that open spaces for creativity within a wide cultural horizon and that generate preventive and corrective forces to the processes of excessive concentration of power. The fulfillment of these objectives evidently presupposes the exercise of a powerful political will supported by an ample social consensus. V. REFLECTIONS UPON MY FIRST THEORETIC ESSAYS BRAZILIAN THOUGHT When I began to study economics--about a half century ago--the idea was dominant in Brazil that ours was a conditioned economy, an expression coined by the most influential voice in our discipline during that era, professor Eugênio Gudin. In that type of economic structure, the principal stimuli come from the outside: the system of the international division of labor in which we were embedded delimited the space in which we moved. The patterns of consumption that determined the behavior of the elites were dictated by the exterior and demanded a level of income which was only enjoyed by a small part of the population. Therefore, the internal demand for industrial products was satisfied almost exclusively with imported articles. The greatest part of the population continued integrated into a subsistence economy, with little monetization. It was assumed, naturally, that the conditioned economy completely lacked its own dynamism and followed, in a passive fashion, the cyclical movements of international commerce. My theoretical works started from disagreement with that conventional vision of Brazilian economic reality. Leaving aside areas in common with the imported doctrines and performing a careful analysis of the available data-- this data almost always rejected by the harried academics--I arrived, without too much difficulty, at surprising conclusions. Thus, for example, despite Brazil being the classic case of an economy whose dynamism depended upon the export of a few primary products, it had, in the decade of the Great Depression, a growth rate no worse than its historical average. Throughout that period, the coefficient of foreign trade (which measures the importance of exports in the GDP) decreased considerably. The economy found "internally directed" means of growth, through expansion of the internal market. I denominated this phenomenon "displacement of the dynamic center." It was the study of this "anomalous" growth, in opposition, that led me to conclude that Brazil's historical form of insertion into the system of international division of labor narrowed the horizon of possibilities for the country's economy. It remained subjected to structural relations with the exterior that curtailed its development. Since the system functioned beneath its capacity, it failed to fully utilize the country's enormous potential in natural resources and demographics. In accord with the then current logic, the Brazilian economy was to remain prostrate in profound stagnation, since the depression in world markets, following the great crisis of 1929, had dismantled its system of external arrangements. Studying the statistics of the period, I noticed that that logic had not prevailed: the Brazilian economy detached from the international system in crisis and won dynamic autonomy by means of widening and diversifying its internal market. To overcome the limitations derived from import capacity, it even turned to the international market for second-hand equipment. What is certain was that, despite the volume of imports being reduced by half, the economy already resumed growth in 1932, supported by the incipient internal market. The explanation of this "miracle" is found in the politics of support for the coffee sector. Reluctantly, under political pressure, the federal government assumed the financing of immense plots of coffee, which increased under the double pressure of production growth and of the brutal fall in prices in the international market. The fact that this expansion of the means of payment would not lead to a disorderly inflation and would act as a creator of effective demand demonstrated that the Brazilian economy had been functioning with excess capacity under the influence of an international system concerned with ensuring service on the external debt. It is true that no one noticed that, by accumulating and burning mountains of coffee, Brazil was building the pyramids which, years later, Keynes would recommend as a last resort remedy to overcome the depression. This policy of creation of effective demand was not consciously adopted by the Brazilian government. It was, more likely, a byproduct of the measures taken before the pressure of the powerful coffee-producing interests, which had as their object the pacification of groups even inclined to take to arms, as they did in 1932.(16) Upon reflection upon this historical experience, during the years of the Forties, I observed that the development of a conditioned, peripheral or semi-colonial economy, as it was called at the time, depends on willful actions, almost always adopted in opposition to market forces. In other words: the fact that such backwardness should have accumulated demonstrated the incapacity to conceive, formulate and execute effective development policies. The measures that permitted Brazil to emerge from the depths of the Great Depression were the result of historical circumstances linked to the struggle for power among regional hegemonic groups. The performance of the Brazilian government, upon burning 80 million sacks of coffee, was seen at that moment as a show of desperation, whose irrationality caused shock. In the same way, the deepening of the industrializing process in the Forties is linked with the disorganization of international commerce provoked by the war. It is clear that the essential occurred in the political field, through which the importance of planning, which ensures the coherence of long- term actions, is easily seen. If mere chance could lead to development, as occurred during the Thirties, it was because that pertained to the universe of the possible, because it was within arm's reach. In summary, if structural change is a necessary condition for the fostering of development, this will not emerge easily in a spontaneous manner from the interaction of market forces. That is the lesson which was gleaned from the experience of the years when the basis for the industrialization of Brazil became established. THE THEORY OF UNDERDEVELOPMENT In my theoretic disquisitions, the problem whose elucidation most motivated me was that of explaining the fact that the elevation of the income level of the population and the considerable advance in the industrialization of Brazil would not lead to a reduction in social heterogeneity, as opposed to what had happened in the so-called developed economies. How to explain the persistence of underdevelopment, Brazil being one of the economies with the greatest growth over the past half century? Approaching the problem from another point of view, why did the above-mentioned increase in the nation's wealth only benefit a reduced portion of the population? My ruminations about this problem led me to formulate what I called a theory of underdevelopment. The social configuration of the countries designated underdeveloped derived from the particular form that the diffusion of technological progress followed, which shaped contemporary civilization. The nodal characteristic of the historical era initiated with the industrial Revolution was the sustained increase in the productivity of labor, stemming from technical advances and from the efforts toward capital accumulation. Even though those two factors mutually conditioned each other, their behavior followed autonomous trajectories. The mere accumulation of capital generated increments in labor productivity by virtue of the economies of scale. Additionally, always assuming access to new markets, the increase in productivity--independently from the advances in production techniques-- resulted from simple reallocation of existing resources. In this situation, a nation that caused its agricultural exports to grow by the employment of lands and manpower previously occupied in subsistence agriculture could achieve increments in productivity and income, even without changing its production techniques. No one denies that foreign trade may have, for centuries, been the creator of wealth, independent from the introduction of new technologies. When Ricardo formulated his theory of comparative advantage, which explains the increases in productivity generated by international interchange, he did not need to append the factor of technological advance. The considerable increases in income derived from the expansion of international commerce in the 19th century stimulated the diffusion of new consumption patterns created by the industrial Revolution. In this way, it was not the new industrial technologies that were universalized, but instead the emerging consumption patterns in the countries which spearheaded the industrialization process. The new productive techniques also tended to become general, particularly in sectors subsidiary to international commerce, such as that of the means of transportation. Slower was the diffusion of new techniques concerned with directly productive activities. This gave birth to differences in the economic and social structures in two types of countries: those in which accumulation and technical progress advanced in a conjoint manner and those others in which such progress favored accumulation in non-productive endeavors and in durable consumer goods, in general imported. One should, therefore, distinguish those two historical processes, whose differences persist until today, independently of the growth rates in income and in access to industrialization. These reflections convinced me that the persistence of underdevelopment is due to factors of a cultural nature. The adoption by the dominant classes of the consumption patterns of nations with much higher levels of accumulation explains the powerful concentration of income, the persistence of social heterogeneity and the mode of insertion into international commerce. In the final analysis, the independent variable is the current of innovations in patterns of consumption which comes from the nations with a high income level. It is this cultural emulation that underlies the pattern of income concentration which is well know. To overcome the effects of this damaging cultural imperative, it is necessary to modify the patterns of consumption in a framework of comprehensive social policies and, at the same time, increase savings in a substantial fashion, restricting the consumption of the groups with highest incomes. These two lines of action are only effective if they are following in a joint manner, and require the planning mechanisms to be supported by an extended social consensus. The challenge that must be confronted is that of achieving these changes without compromising the spirit of initiative and innovation upon which the market economy depends. With respect to the form of combining planning with private initiative, the experience of the late-industrializing nations of southeast Asia, who occupied the forefront in the difficult task of reconstructing anachronistic social structures, is very instructive. VI. THE NEW CHALLENGES THE POINT of departure for my intellectual work was the desire to clarify the reasons why Brazil's participation was backward in the industrialization process occurring in the world beginning in the last quarter of the 18th century. Upon understanding the reach of the effects of the industrial Revolution on the international division of labor, I understood as well the origin of the phenomenon of underdevelopment, which permitted me to establish the conceptual framework that provided the basis for the essential part of my theoretic work. From there emerged as much the inclusive vision, which conceives development and underdevelopment as dimensions of a single historical process, as the idea of dependency as the political component of that process. It seemed to me that, to comprehend the meaning of the historical process of formation of an economic system that tended to universalize itself and which had as its starting point the acceleration of accumulation and technical progress, it was necessary to examine it from two points of view. The first alludes as much to the transformations in modes of production--that is, to the disappearance, total or partial, of feudal, guild and artisan forms of organizing production--as to the progressive implantation of factor markets for production: manpower, instruments of labor and natural resources, subjects of appropriation on the part of private agents or the public power. The second viewpoint alludes to the activation of commercial relations tied to the implantation of an inter-regional system for the division of labor. In this system, the regions in which accumulation intensifies specialize in those productive activities that, thanks to the transformation of the mode of production, have the greatest possibilities for technological advances, in that they become generating centers of technological progress. For its part, this geographic specialization, by virtue of the effect of comparative advantages in an expanding market, also brings with it increases in productivity, independent of the advances in production techniques, always given that they proceed to a more effective usage of the available productive resources. These increases in productivity, supported above all by foreign commerce, serve as a transmission belt for innovations in the material culture, which march pari passu with intensified accumulation in the nations that constitute the vanguard of the industrial Revolution. Thus, in privileged regions, technical progress permeates the forms of production without lags, at the same time that it modernizes the patterns of consumption. Otherwise, in marginalized regions, that penetration initially circumscribes the consumption patterns, and limit their effects to the modernization of the lifestyles of some segments of the population. It is true that, further along, the industrialization process tended to become universal, through what was called import substitution. Yet belated industrialization, ruled by the law of the market, tended to reinforce existing social structures due to the scant absorption of manpower and to the high propensity to consume of the modernized segments of the society. In consequence, underdevelopment is nothing but a certain configuration of the economic structure, derived from the way in which technical progress was propagated on the international plane. This unifying vision of industrial capitalism led me to conclude that the overcoming of underdevelopment would not be the product of the simple action of market forces, but instead would call for a political project oriented towards the mobilization of social resources, with the object of starting the task of reconstructing certain structures. Therefore I have endeavored, since the time when I worked for CEPAL during the Fifties, to elaborate a technique of economic planning that would make viable the overcoming of underdevelopment at a minimum social cost. That technique attempts to modify the structures which block the socioeconomic dynamic, such as landlordism, corporatism and the inefficient channeling of savings or its wastage on abusive forms of consumption or in its flight to the exterior. The structural modifications would have to be treated as a liberating process for creative energies and not as a task of social engineering as it had always previously been conceived. The strategic objective is that of removing the obstacles to the creative action of the people, which, in underdevelopment, is limited by institutional anachronisms and by bonds of external dependency. I was clearly conscious that true development is manifested in the men and in the women and has an important political dimension. This inclusive global vision also permitted me to see, from the beginning of the Seventies, that the underdevelopment breach would become more traumatic to the degree in which the crisis was aggravated that, evidently, affects the consumerist global civilization. For a long time one was conscious that that civilization has a predatory process as a characteristic component: it is en route to drying up the wells of energy that nourish the lifestyle which it favors; the phenomenon of climate change on a global scale exists, and biodiversity is ever more impoverished. One cannot simply ignore the indices, very clear to others, that the civilization which emerged from the industrial Revolution advances towards great calamities. It concentrates wealth in a minority whose lifestyle requires growing waste of non-renewable natural resources, which is only sustainable because it imposes great penury, including hunger, upon the majority of the human species. A minority disposes of the natural resources of the world, without demonstrable worry about the consequence for future generations of the waste that it incurs. If it is in fact true that underdevelopment itself represents an efficient mechanism for lessening the pressure upon resources, that it keeps consumption levels low for the great majority of the world's population, it is also so that it permits the diffusion of consumption patterns not in correspondence with the low income levels of that majority. One can expect a sharpening of the ever more drastic expedients to ensure the effectiveness of this discrimination, by the demonstration effect exercised by the new forms of consumption that radiate from the dominant centers and by the pressure derived from the demographic growth of the poor nations. The financial pressure exercised over the underdeveloped nations who fell into the trap of external indebtedness presages the forms of control that will be exercised in the future for the purpose of containing the expansion of consumption in the underdeveloped world. The challenge to be confronted at the dawn of the 21st century is that of altering the course of civilization, changing its axis in a relatively short period from logic or means, placed in the service of accumulation, to the logic of ends, as a function of social well-being, the exercise of liberty and of cooperation between peoples. To respond to this challenge shall be the central task among those that demand man's attention in the unfolding of the new century: to establish new priorities for political action as a function of a new conception of development, which locates this within the reach of all peoples and which permits preserving ecological equilibrium on the planet. The frightfulness of underdevelopment should be neutralized. The main goal of social action has to cease being the reproduction of the consumption patterns of the opulent minorities and to orient itself toward the satisfaction of the population's fundamental necessities and to education conceived as development of human potentialities in the ethical, aesthetic domains and that of mutually binding action. Human creativity, now directed in an obsessive manner towards technical innovation in the service of economic accumulation and military power, must reorient itself towards the search for collective well-being, conceived as the realization of individual and community potentialities in mutual solidarity. An idea that now begins to stand out is that of the responsibility of the nations which now comprise the vanguard of industrial civilization in relation to the laggards--which is very expensive, yet not impossible, to repair-- deriving from the common patrimony of humanity, consisting of natural resources and of the cultural inheritance. The United Nations Conference on Environment and Development, held in Rio de Janeiro in 1992, represented the platform on which, for the first time, the thesis was defended that there exists an ecological bill charged to the countries that, occupying positions of power, benefited from the startling destruction of non-renewable (or renewable at high cost) natural resources which provides the foundation of their populations' lifestyle and from the type of development spread throughout the world by their enterprises. In a recent work from CEPAL, presented at the Inter-American Conference of Tlatelolco, in Mexico, preparatory to the Rio conference, the responsibilities of the rich nations were defined in five areas where the environmental degradation had been particularly severe: destruction of the ozone layer; climate change; reduction in biodiversity in the countries of the Third World; contamination of rivers, oceans and soils; and the export of toxic waste. The development model that should be progressively implanted over the next century could be designed beginning with two guiding ideas: a) to five priority to the satisfaction of fundamental necessities to which the Universal Declaration of Human Rights refers, in a development framework aimed at stimulating individual initiative and solidarity, and b) to establish international responsibility for the deterioration of the natural patrimony of the earth. The strategic objectives are clear: a) to preserve the natural patrimony, whose actual degradation would lead in an inexorable manner to the decline and collapse of civilization, and b) to liberate creativity from the logic of means (economic accumulation and military power) to place it at the service of the logic of ends: the full development of human beings, conceived as a end in themselves by their being the possessors of inalienable values. These objectives should be considered as a project whose realization requires, if not the cooperation of all people, at least its progressive adoption by the majority of them. Before the threat of destruction of the human species, arising from the accumulation of nuclear arms, a half-century ago the embryo emerged of a political entity that had begun establishing links of interdependence among peoples, going beyond the traditional relations of domination and dependency. The long and difficult apprenticeship of coexistence among people, who continue in opposition due to economic, religious or cultural motives--or simply due to their respective historical inheritances--was initiated in that framework. That political entity, still in formation, is the United Nations, an organization to which I dedicated ten years of my life and in which I learned to view the world as a contradictory metropolis which is, at the same time, a village under construction, for there are powerful forces that nourish a process of rapprochement among peoples which renders solidarity imperative. The threat of nuclear destruction, first, and the environmental disaster that now begins to take shape impede human survival in the absence of cooperation. The path for that cooperation includes a change of course from a civilization dominated by the logic of means, in which accumulation is placed over everything else. In what most directly concerns us, that change of course requires the abandonment of many illusions, exorcism of the fantasies of a modernity that condemns us to sterile cultural imitation. We must recognize our historical situation and open the way to the future beginning with understanding our reality. The first condition to escape from underdevelopment is that of escaping the obsession with reproducing the profile of those who proclaim themselves developed. It is to assume our own identity. Under the existing crisis of civilization, only confidence in ourselves will be able to restore to us the confidence of arriving at a good place. In the new framework now being shaped, the destiny of peoples will depend less on utterances from the centers of political power and more on the dynamics of civil societies. Without the State having to wither away, in accordance with the socialist utopia of the 19th century, it shall become impossible for it to be controlled by minorities of a totalitarian spirit if vigilance from the international civil society which is emerging is effective. The consciousness that it is the survival itself of the human species which is in play will consolidate feelings of solidarity and will favor the strengthening of the figure of citizen, dedicated to the defense of values common to all humankind and who knows that that fight does not permit enmities, except in defense of liberty itself. One's eyes cannot be closed to the evidence that human survival depends upon the course taken by a civilization which has been the first to prepare the means for its own destruction. The possibility of confronting that challenge demonstrates that the possibility for survival exists. Yet it is impossible to overestimate the degree of responsibility of persons called to take certain political decisions in the future. Only a citizenry conscious of the universality of the values that unify free peoples can guarantee the suitability of the political decisions. VII. THE CULTURAL DIMENSION OF DEVELOPMENT THE EXTENSION that today is attributed to the concept of cultural politics is relatively recent. It originated in the conviction that increase in material wealth does not always translate into improvement in the quality of life. I do not refer to the fact that, in countries of high per capita income, there continue to exist considerable population groups who do not attain satisfaction of their basic necessities, but more to the existence of population groups who, despite enjoying significant improvements in their material levels of existence, continue to be prisoners of very narrow cultural molds. Indeed, experience clearly shows that augmentation in the material levels of life is not necessarily accompanied by improvements in the richness of cultural life and, more likely, reproduces the social stratification existing in the past. The accumulation of goods usually allows increased wastage at certain levels of consumption, without provoking true diversification in their enjoyment and without allowing, to that extent, an effective enrichment of life. Reflection on these themes caused me to critically examine the development models that usually were enthusiastically recommended at the beginning of the Fifties. All those models are based on the idea that the logic of accumulation, insofar as it refers to the system of productive forces, should prevail over the set of factors which comprise the social process. We deal with the principle that, since the means at the disposition of societies are scarce, the criterion that should govern their utilization is that of maximum efficiency, which assumes an emphasis on the quantitative. This reasoning implicitly carries the notion that the ends which determine the social order behave in an autonomous manner with respect to the means, and that this behavior reflects the options which individuals prefer as a function of their natural necessities, their aspirations and their ideals. Almost no attention is paid to the interrelations between means and ends, to the fact that the control which individuals, groups or nations exercise over means can lead to manipulation of the ends of other individuals, groups or nations. Thus then, I conceive of ends as goals of the collectivities, as symbolic systems that define cultures. Why should we not concern ourselves, then, with the true meaning of things, with the restrictions that limit individuals' basic options, with the logic of ends? If development policies have enriching the lives of people as the objective, their point of departure would have to be perception of the ends, of the goals that the individuals and communities propose. Therefore, it is the cultural dimension of those policies that should prevail over all others. In previous pages, with another analytical focus, I offered a critical vision of the development models that had been followed in industrial civilization. It has been known for a long time that the productive processes consume energy, destroy non-renewable resources, increase the entropy in the universe. The perception of these facts made clear the importance of observing economic systems in a global way and, especially, of examining the effects of their integration on a world scale, which places in evidence the relations between ends and means. Expressed more modestly, if the agriculture that is practiced in a country destroys the soils and their restoration presupposes growing costs, it is clear that the interests of the current generation, measured by economic criteria, come into direct conflict with the interests of future generations. The same can be said of all productive systems based upon the exploitation of non-renewable resources, this being, in an especially notorious way, the case for the nations who live off of income derived from the exploitation of oil. The ecological focus allowed this critical vision to be refined in making explicit the non-market costs of productive processes. Nevertheless, that which directly concerns me here is the cultural dimension. The culture should be seen, simultaneously, as a process of accumulation and as a system, that is, as something that has internal consistency and whose totality cannot be fully explained by the meanings of each part, thanks to the effects of synergy. In this sense, what characterizes the societies which insert themselves in international trade as exporters of several primary products and which, subsequently, experienced an industrialization process based upon export substitution, there the accumulation of cultural goods found in them is determined in large part from the outside, as a function of the interest groups who control the international transactions: the internal consistency of the cultural system is, to that degree, subjected to destructive pressures. To think, and even to dress, in a dysfunctional fashion may be lifestyles carried to an extreme; certain forms of urbanization can lead to the destruction of an important cultural patrimony. The foregoing explains how material development of the economically dependent nations has a particularly large cultural cost. Discontinuities between the present and the past are not only the fruit of creative breakthroughs, but more frequently reflect the predominance of the logic of accumulation over the coherence of the cultural system This is the reason why those societies whose flows of new cultural goods possess great autonomy with respect to their own cultural system--the coherence of which is constantly subjected to tests--require, more than others, a cultural politics. This accentuates the importance of the concept of cultural identity, that expresses the idea of keeping the past in an enriching relationship with the present. On making reference to cultural identity, we allude to the coherence of the value system from a double point of view, synchronous and diachronic. This is the area of widest application which should be embraced by the politics of development, economic as well as social. Only a clear consciousness of identity can provide meaning and direction to the permanent effort at renovation of the present and construction of the future that constitutes development. Without that, they remain subjected to instrumental logic, which brings more urgency insofar as it tends to be governed by the technological dimension. VIII. THE RISK OF UNGOVERNABILITY (17) INCREASE IN DEPENDENCY Having internal savings as the essential basis of financing, the Brazilian economy reached, over a long period, a relatively high rate of growth. Today, the rates of growth are low, investments are depleted and the nation finds itself immersed in a process of considerable external indebtedness. The macroeconomic maladjustment is evident. In accord with the data of the Brazilian Institute of Geography and Statistics (IBGE) the annual deficit on the current account of the balance of payments exceeded, in 1997, 30 billion dollars, at a time when the value of the exports was approximately 50 billion and that of imports on the order of 62 billion. Half of the imports were financed with external debt, and the country is faced with an economic growth rate that is not very different from the rate of increase in the population. A large part of that indebtedness is destined to finance consumption, at the same time that, to tranquilize the speculators, copious reserves are maintained and elevated interest is paid. All this translates into the sterilization of savings and into a growing risk of ungovernability for the nation. If it depends ever more on external resources, any setback in the international arrangement can have destabilizing consequences, with political repercussions. Thus, potential macroeconomic instability points towards ungovernability. WHAT SORT OF GLOBALIZATION? All democratic governance presupposes diversity of opinions. With greater diversity, greater firmness of leadership is required. It is true that in the present Brazilian government there are persons seriously occupied with the consequences of indiscriminate globalization who recommend certain negotiating patterns. The above was evident in the recent discussion with the North Americans regarding the project of establishing a Free Trade Area of the Americas (ALCA). It cannot be overlooked that the reality is an era of enormous concentration of power, which favors the large enterprises. Modern technology stimulates that process, but one cannot ignore that the current world physiognomy was molded by political forces. Globalization has many obvious negative consequences, highlighted among them the growing external vulnerability and the worsening of social exclusion. In the United States, social exclusion is manifested as concentration of income and wealth; in western Europe, as widespread unemployment. The great challenge consists in minimizing the evils resulting from the loss of control caused by globalization, and to respond to it policies that take the specificity of the country into consideration are required. To do so, globalization must not force the adoption of uniform policies. The illusion of a world that follows an arrangement of a single set of rules, dictated by a super-IMF, exists only in the imagination of some people. The differences between economies derive not only from economic factors, but also from the diversity of cultural characteristics and historical particularities. The idea that the world tends to become homogeneous stems from an uncritical acceptance of the economistic thesis. The debate that actually dominates the European scene centers on the ways of avoiding that globalization aggravate social exclusion. The results of the 1997 elections in the United Kingdom and in France shows that that problem captures the attention of the citizenry. In Brazil, it is evident that the social question requires a politics of wide outreach, given that its unemployment is as much the result of the economy's stagnation as of its growth. Some projects initiated by governmental entities, such as the restructuring of the steel industry, are big generators of layoffs. They base themselves upon the principle that there is no goal of greater importance than that of augmenting international competitive capacity. How can it be ignored that also fundamental are the struggles against hunger and social exclusion? The problem is that the groups who most benefit from globalization are those of greatest political weight, which is what the economic logic tends to impose. The development strategy that favors international involvement reduces the political weight of the working class, especially of the unionized sector. It provides a means of making the economic system flexible and of reducing salaries. There is a generalized movement that is oriented towards increasing microeconomic productivity, with disregard for the social effects. Now then, what is important is not competitiveness per se. Brazil was always competitive in some sectors. This is demonstrated by the fact that the nation had been capable, in a relatively short period, of profoundly transforming the structure of its exports, at the same time as establishing one of the world's principal industrial plants. I knew a Brazil limited to exporting a few primary products and I followed the trajectory that converted it into the important exporter of manufactures that it now is. Nevertheless, to elevate international competitiveness to the rank of a strategic objective that subordinates everything else is equivalent to entering a situation of dependency reminiscent of the pre-industrial age. Globalization is, above all, a financial phenomenon, with significant consequences to the systems of production. Today, the great enterprises plan their locations with the entire planet in mind. This is evident in the automotive industry. The final effect upon international commerce is positive, but it is necessary to include important adjustments. In the half century that followed the second World War, the growth of international trade was more than double the growth in world production. This shows that, in that period, there was an important opening of economies, despite that for a good part of it the vision emerged from Bretton Woods predominated, according to which the balance of payments was something too important to leave dependent on the market. PRESSURE OF SOCIAL FORCES There are many who ask why, as opposed to what the heralds of the liberal doctrine foresaw, the internationalization of productive structures is not bringing along with it a reduction in income disparities. This is because the income distribution, on the national plane as on the international, is a question fundamentally determined by political factors. If the world had evolved in obedience to the canons of a pure capitalism, income would be more concentrated than what occurs today. However, since the 19th century, the contesting social forces were very militant in Europe and interfered with the structures of political power, opening space for important structural reforms, such as the reduction in the workday. The above demonstrates that the formation of modern societies reflects not only the appearance of new techniques, but also that it has been a process with wide social projection. It was thanks to the pressure of social forces that salaries rose, following improvements in productivity; that systems of social security were established; and that policies of assistance were defined for less developed regions. By modifying the profile of income distribution, these new political forces changed the physiognomy of the society and, paradoxically, engendered within it new forms of dynamism. If the tendency toward concentration of income had been maintained, the narrowness of the markets would have been manifested. The cyclical crises would have been even more acute. If they were attenuated, it was because capitalism changed due to pressure exerted by the masses. The expression of this phenomenon in political-economic terms is found in Keynesianism, which legitimates the growing recourse to political instruments in economic management, opening the era of social democracy. Even in the United States, where the development of capitalism was less restricted by institutional factors, the State exerted itself to defend some sectors of economic activity or certain regional interests. It can be shown that capitalism, over the entire length of a century, benefited ever wider social groups, not so much because income inequalities had abated, as that it could satisfy the basic necessities of the majority of the population. Specific historical factors influenced this evolution, giving way to very diverse results. Upon comparing the historical genesis of the United States with that of Brazil, one notices that in the nation to the north it was the model of colonialization, of territorial occupation, that prepared the society for modernization. A social model was defined there based upon the patrimonial division of the land, while in Brazil there persisted, throughout the process of territorial expansion, an extremely concentrated appropriation of the land that was characteristic from the beginning. In summary, the U.S.A. built on a social model that stimulated the diffusion of the fruits of technical progress, which permitted and motivated direct investments in the development of human resources and opened space for individual initiative. It does not take much imagination to notice that this provided a special basis for the flowering of the capitalist spirit, in the sense it was understood by Max Weber. The perception of the importance of investment in human resources was much delayed. I became conscious of this fact when I presented the Triennial Plan, at the outset of the Seventies.(18) Darcy Ribeiro,(19) who was charged with developing that aspect, launched a bold and lucid project; it fell to me to present it and obtain the approval of the Council of Ministers for it. With the Darcy plan, the problem of basic education, which is the most difficult, would have been resolved in that generation. Unfortunately, the history of the nation took a well-known turn,(20) and priority was given to other goals. THE LANDLESS RURAL WORKERS' MOVEMENT The foregoing does not mean that history has no surprises reserved for us. Let us consider that surprising phenomenon which is the migration of the inhabitants of the cities towards the rural areas, in search of productive employment. In modern history, population movements--with the exception of international migrations--have always occurred in the inverse sense: from the countryside to the cities. The population that abandons the rural zones, displaced by technical progress, struggles determinedly to obtain employment in the urban areas. If the urban markets become incapable of continuing to absorb the labor force, the phenomena of structural unemployment and of social exclusion, present in a great number of countries at different levels of development, are produced. This problem is being approached in Europe through changes in the structure of employment. Some nations in Asia have reverted recently to the ancient methods of expelling the foreign population. We deal with a problem from which few nations will be able to escape. In Brazil one confronts an uncommon situation: there is an enormous availability of cultivable lands; there are groups of workers who desire to return to the countryside, from where they were expelled not long ago, and there is a potential demand for agricultural products, within and outside the country. In Brazil, the only new social force with great capacity for mobilization is the Landless Rural Workers' Movement (MST) which pursues basic objectives: the fight against the ancestral regime of land tenancy, which supported the country under backwardness, and recommends investments in small landholdings, with the idea of promoting the emergence of a more structured civil society in the rural zones. Through adequate planning, it turns out to be completely viable to accommodate a large fraction of the actual four million landless workers in small productive units. The organization of several of their activities in the form of cooperatives would provide them greater consistency and would improve their negotiating power vis-à-vis the powerful commercial organizations. INTEGRATIVE ROLE OF THE STATE The Brazilian State fulfilled a strategic role in the unique construction that has given rise to Brazil, country-continent, of surprising ethnic heterogeneity and linguistic, and even cultural, homogeneity. Brazil was born and unfolded as a creature of the Portuguese State, not unlike the trade companies that emerged in the century of the great transoceanic expeditions. The surprising fact that territorial unity had been preserved during an historical phase which stimulated the multiplication of nation-states was also the result of deliberate political action. It was also the State that was charged with coordinating the efforts permitting a response to the challenge of industrialization. When the establishment of the basic elements of a modern productive system had been achieved and the circumstances had been created to complete national construction on the social plane, an inversion of the historical process was produced. The shutdown of the political process, upon destroying the bases of democratic participation, gave impetus to a process of degradation of the State. It suffered a metamorphosis, growing in a disordered manner and escaping the control of civil society. The dysfunctionality of the state apparatus is easily perceived in the financial sector. In past epochs, the public sector usually contributed to capital formation with at least 5 percent of the GDP, although a part of these resources arose from inflation. Today, a consensus exists that inflation should not recur in the financing of investment. Thus, only a change in the tax base could replace the role of inflation; this is, only the State could correct the tendency of the middle classes toward consumerism. The option consists of fundamentally modifying the profile of income distribution, which becomes more difficult to the degree that globalization advances, or achieving fiscal reform that ensures a substantial increase in the savings rate. The political economy of Brazil should adopt as a strategic goal the expansion of the internal market, which means giving priority to the interests of the population. The principal engine for the internal market is the mass of salaries. International participation is important for many reasons: it permits completing the availability of natural resources; it facilitates access to vanguard technologies; it widens, within certain limits, the total available savings, etc. Furthermore, in an economy with the characteristics of the Brazilian, all these factors have at least a complementary role. The essential is the growth of the internal market, upon which depends a nine-tenths portion of the economy. Only ignorance or bad faith would permit confounding this opinion with a sermon in favor of closing the economy. During the long period in which Brazil maintained a policy of defense of its internal market, the transnational corporations made strong investments in the country, as is seen in the establishment of a great automotive industry beginning in the decade of the Seventies. The immediate goal was not international competitiveness, as seen in that, in many cases, equipment may have been used which was not the most modern. It was more to facilitate the expansion of the internal market, with a target of much greater social coverage. Economic growth should be seen as a means for increasing the well-being of the population and of reducing the degree of misery inflicted on a part of it. As these two objectives are qualitatively different, one should be very cautious in using indices that claim to measure the average well-being of the population. How can values of a type different from those of satisfaction or pain be added or subtracted? Students of development must confront paradoxes of this sort. Perhaps most appropriate would be to present two maps: that of social well-being and that of social penury. In this latter map, hunger and social exclusion could be reflected in an adequate fashion and the negative effects of the globalization process would be explicitly demonstrated. International competitiveness could be measured in terms of job losses and this in terms of the hunger imposed on some segments of the population. If to the social costs are added the environmental costs, one will arrive at the conclusion that the existing data used to measure or express the behavior of the Brazilian economy are totally inadequate. She will also conclude that such data, by obscuring the reality, become instruments of the groups who make up the structures of domination which sustain the strategy of globalization. NOTES 1. An early version of this text appeared in the journal Economia Aplicada, vol.1 no.3, July-Sept.1997, Sao Paulo. 2. Gilberto Freyre (1900-1987). Casa-Grande & Senzala: a study in the development of Brazilian civilization, Random House, New York, 1964. 3. CEPAL - U.N. Comision Economica para America Latina y el Caribe. 4. Eugenio Gudin (1886-1986), principal exponent of the Brazilian monetarist school. [Navarrete] 5. Raul Prebisch (1901-1986) was executive secretary of the CEPAL from 1950 to 1963. [Navarrete] 6. The second government of Getulio Vargas (1883-1954) occurred from 1951 to 1954. [Navarrete] 7. Banco Nacional de Desenvolvimento Economico e Social (BNDES). [Navarrete] 8. Juscelino Kubitschek de Oliveira (1902-1976), president of Brazil from 1956 to 1961. [Navarrete] 9. A Spanish edition exists: La formacion economica del Brasil, Fondo de Cultura Economica, Mexico City, 1969. [Navarrete] 10. Irineu Evangelista de Sousa, baron and viscount of Maua (1813-1889), pioneer of Brazilian industrialization, established a shipyard and a foundry in Niteroi. [Navarrete] 11. Roberto Simonsen (1889-1948), economist, historian and businessman, author of Historia economica do Brasil, Rio de Janeiro, 1937. [Navarrete] 12. Getulio Vargas, in 1954. [Navarrete] 13. Juscelino Kubitscheck de Oliveira. [Navarrete] 14. See "The USA's Twin Deficits", World Imbalances, WIDER report of 1989, Helsinki. 15. See Non-Alignment in the 1990's (a study prepared by the Jakarta Conference) South Centre, Geneva, 1992. 16. The allusion is to the so-called "constitutionalist revolution" of the Sao Paulo elite against the government of Getulio Vargas, which took place from July 9th to October 2nd of 1932. [Navarrete] 17. A first version of this text appeared in the Jornal dos Economistas, no.97, May 1997, Rio de Janeiro. 18. The Triennial Plan, of 1963, was elaborated during the government of Joao Goulart. [Navarrete] 19. Darcy Ribeiro (1922-1997), distinguished anthropologist, educator, politician, and intellectual. [Navarrete] 20. An allusion to the military coup of April 1st, 1964. [Navarrete]