Books on the political economy of Brazil, like Brazil itself, have gone through a cycle of boom and bust. At the end of the 2000s and the beginning of the 2010s many of the titles of these books reflected optimism and even euphoria, which makes them look rather dated now. In this new volume, written after the post-2013 slowdown in the Brazilian economy but before the impeachment of President Dilma Rousseff in 2016, the editor Ben Ross Schneider strives for balance by choosing a fairly neutral title and emphasising the weaknesses as well as the strengths of the Brazilian political economy. Schneider's professed aim is for ‘depth rather than breadth’ (p. ix) and the chapters are of consistently high quality.
Schneider has assembled a team of 17 knowledgeable scholars to produce the book. The majority of the contributors are political scientists, while the rest are economists and faculty in schools of business administration and public policy; one is a historian. Schneider organises their contributions into four sections: development strategy (with chapters on natural resources, the state oil company Petrobras, and exchange rate management); governance (state capitalism, the Federal bureaucracy, and social policy); social change (the reduction of poverty and inequality); and political representation (with chapters on Brazilian legislative elections and taxation). Readers looking for data on Brazil's political economy and political system will not be disappointed: the book contains 55 figures, 11 tables, eight maps and four graphs. All the chapters are on recent political economy, although Tyler Priest's chapter on Petrobras, Aldo Musacchio and Sergio Lazzarini's chapter on state capitalism, and Daniel Hidalgo and Renato Lima de Oliveira's contribution on Brazilian legislative elections contain valuable historical information on various parts of the twentieth century.
The book is particularly good at exploring some of the inner recesses of the Brazilian state, and examining the origins and impacts of important new public policies. Kevin Gallagher and Daniela Prates argue that, after the 2008 financial crisis, Brazilian state managers, most notably the New School-trained economist Nelson Barbosa at the Ministry of Finance, were able to introduce selective capital account regulations in order to mitigate the impact of volatile financial flows on the Brazilian currency and financial system (pp. 96–100). Barbara Nunberg and Regina Pacheco show how Brazil's Federal bureaucracy combines technocratic and meritocratic recruitment and promotion with the expansion of high-level political ‘confidence posts’, resulting in a state with a mix of ‘Weberian’ and more overtly political characteristics (p. 147). Marta Arretche goes against many of the assumptions about federalism to assert that Brazil has reduced inequality throughout the territory by implementing centrally framed and locally implemented programmes in health and education (pp. 162–84).
One of the most significant changes in Brazil over the last 15 years has been the emergence of the so-called ‘new middle class’. According to Tim Power in his excellent chapter, individuals from households in this middle-income category (called ‘Class C’ in Brazil) went from 38 per cent of the Brazilian population in 2003, or about 66 million people, to 60 per cent in 2015, or almost 120 million people (p. 218). Power examines the political causes and consequences of the growth of this income and consumption category, while avoiding the debate about whether this is a middle class in a sociological sense. In a useful review of the literature, Power compares and contrasts explanations for this change while speculating about its political consequences, suggesting avenues for new research.
Yet Power's chapter leaves an important question unanswered: what are the divisions within Class C? Given the size and diversity of Class C, unpacking the category seems essential. In particular, some survey research suggests that different segments of Class C have contradictory opinions about the desirability of government redistribution – not just conditional cash transfer programmes, but programmes in health and education. This makes sense, because above a certain income threshold, families begin to opt out of public services, buying healthcare and education from private-sector providers. While the growth of the middle class may generally be associated with a strengthening of democracy (p. 8), in Brazil it may instead have exacerbated conflict over redistribution and contributed to an increase in political polarisation.
Marcus Melo, in his chapter on taxation, paints a somewhat questionable portrait of the ‘fiscal contract’ in Brazil. Melo argues that the country has no room for more taxation, as tax revenue is already at 37 per cent of GDP, above the OECD average (p. 269). He also laments the fact that tax revenue comes disproportionately from the better off (pp. 286–7). This is hardly surprising in a country as unequal as Brazil. What Melo neglects to mention is how low taxation on wealth is. For example, Brazil's federal government limits the tax rate on inheritance to 8 per cent (compared to 40 per cent in the UK, above a £325,000 threshold). Taxes on land and property are also relatively low. Furthermore, as the Petrobras corruption scandal reveals, tax evasion by the wealthy, with their access to sophisticated financial instruments and offshore accounts, is a serious problem. According to one source, the amount of money stolen from the public sector worldwide that has been repatriated, as of 2014, was just $4.5 billion, while the estimate of the amount taken runs into the hundreds of billions (‘Despots’ Jackpots’, The Economist, 25 February–3 March 2017, p. 78). Brazil is part of this phenomenon, despite the recent track record of its anti-corruption investigators.
There are other ways in which Melo's chapter does not fully tease out anomalies in Brazil's tax regime. Tax as a percentage of income tends to be higher amongst the poor than the rich in Brazil. Because so much tax is value added and therefore levied on consumption, the poor can end up paying as much as half their income in tax – a far greater proportion than that paid by the well off – even if the absolute amounts they pay are low. Income tax, meanwhile, is capped at 27.5 per cent in Brazil (compared to 45 per cent in the UK), while many independent professionals pay only 15 per cent. By neglecting these issues Melo is perpetuating the questionable view that because the aggregate amount of taxation is high, taxes cannot be raised on anyone, and it is impossible and undesirable to redistribute the burden of taxation in Brazil. This may be the view of many in the current government, which has constitutionally frozen public spending in real terms, but it is one that is unlikely to be shared by all social scientists or all Brazilians.
In summary, this is a valuable edited volume that will be useful to anyone interested in Brazil's political economy. If used in the classroom, it is probably better suited to postgraduates than undergraduates. It does not cover the government of President Michel Temer (2016–present), but it analyses several important and recent changes to Brazil's economic and political order with thoroughness and precision.
