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STRATEGY FIRST, then accounting

strategy-first-then-accounting

STRATEGY FIRST, then accounting

A national economy cannot expand simply through the game of exchanges, nor can a capitalist economy develop in an expanded and accelerated way without it being associated with its own State and with its project of power accumulation and transformation or modification of the established international order.

Fiori, J.L. História, Estratégia e Desenvolvimento. São Paulo: Editora Boitempo, 2014, p. 28

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By José Luís Fiori(1)

The visit of the Argentine President Alberto Fernández, immediately after the election of the new Brazilian president, Luiz Inácio Lula da Silva, has several symbolic connotations linked to their personal relations, and associated with the historical relations between the two countries. At the same time, the speed of the visit draws attention to the urgency of the challenge and the seriousness of the threat looming over Argentine and Brazilian societies, now divided and polarized by a relentless struggle between two absolutely antagonistic future projects, for themselves, for the Southern Cone and, in a way, for all of South America.

Brazil and Argentina competed for South American hegemony for almost a century, since the Paraguayan War, but at the same time they were the privileged territory of two great cycles of economic growth, which lasted almost identically: in Argentina, between 1870 and 1930; and in Brazil, between 1930 and 1980. Between 1870 and 1930, the Argentinian economy grew at an average annual rate of about 6%; and already at the beginning of the 20th century, it had become the richest country in the South American continent, and the sixth or seventh richest economy in the world, with a per capita income four times higher than that of Brazilians in the same period.(2) However, after 1940, Argentina entered a long entropic process of social division and chronic political crisis, as it failed to define and agree on a new national development strategy suited to the post-World War II geopolitical and economic context. It was almost at the same moment of the Argentinian deceleration that the take-off of the Brazilian economic acceleration began, in the 1930s, extending until the 1980s, when the Brazilian economy grew at an average annual rate of 7%, surpassing Argentina and becoming the main economy of South America already in the 1950s. Thus, a long period of almost 110 years of continuous growth was completed, in the Southern Cone of the South American continent, which should also include the simultaneous case of Uruguayan economic success, at least until the 1950s. A remarkable economic performance, even if we consider the world history of capitalist development.

Also in the Brazilian case, this economic performance was interrupted in the 1980s and entered a terminal crisis after the end of the Cold War, when the Brazilian economy tried and failed in its neoliberal experiment; then it experimented with a new progressive project of economic growth, with the creation of a welfare state, which was overthrown by a coup d’état and by an extreme right-wing government established and led by the military, which once again counted on the US external support. That is why it can be said that Brazil has also been affected, in the last thirty years, by the same “disease” that hit Argentina in the middle of the last century, and that keeps the neighboring country in a chronic state of economic lethargy and progressive social impoverishment.

Thus, it can be stated that the meeting between President Fernández and President Lula, on October 31st, can go down in history as the moment in which the two countries decided to face together this common challenge through a strategic alliance that deepens the economic ties between them, and sustains their national and regional interests within an international system that is extremely closed and hierarchical. An international system that has always been controlled by a very small number of “great powers” that have accumulated, over time, an amount of economic, financial, and military power that is disproportionate to their territorial dimensions. And they exercise the “structural power” at their disposal – relentlessly – to defend their monopoly position within the system, blocking the rise of competing countries through a predatory competition that systematically disrespects the “laws of the market”.

However, this system is now going through a crisis and transformation of enormous complexity, which should last for a long time, largely provoked by the Asian rise and the end of the Eurocentric civilizational hegemony, and also by the decline of the global military power of the “peoples of English language”. But we must be careful, because it is precisely in these moments – and almost only in these moments – that gaps and opportunities for the rise of new countries within the hierarchy of power and wealth of the international system open up. These are rare moments, true historical bifurcations, which can be used by countries located outside the core of global power, but which can also become a great missed opportunity to climb positions in the hierarchy of international power and wealth.

History teaches that in times of great crises and transformations, such as the one we are experiencing, there are three major strategic alternatives that can be followed by countries located outside the “core” of the system:

i) The first one, imposed by war or by the free choice of some countries, is a strategy of subordination, integration or conscious vassalage in relation to the great powers, which in return offer privileged access to their markets and credit and financing systems. Many speak of a type of “invitation development” or “associated development”, as was the case with the English “domains”, or also with the countries that were defeated in the Second World War and later transformed into American military protectorates, such as Germany, Japan or Taiwan, for example. These countries almost always follow the orthodox booklet of economic policy recommended or imposed by the power of the victorious or “protective” powers.

ii) The second strategy was followed almost invariably throughout history by all countries that wanted or proposed to change their relative position within the international system, challenging their political and economic status quo and facing the sanctions of their “big controllers”. Many call it a catch-up strategy, but one could also speak of an “insurgent model”. In general, these countries adopt more protectionist or mercantilist economic policies, and their States usually actively promote technological development and the international expansion of their private capital, facing predatory competition from the great powers. These countries can be blocked or even destroyed by the powers that control the system, as was the case with Germany, Japan, and the Soviet Union in the 20th century; but they can also win and move on, as was the case with the United States in the 19th century and China in the 21st century.

iii) Finally, one cannot speak exactly of a strategy when referring to countries situated on the “bottom floor” or “periphery” of the world power system and that do not have the political will or instruments of power to challenge the established order. In this case, one could perhaps speak of a “joyful vassalage”, in the case of countries that accept, even with some enthusiasm, their condition as suppliers of primary goods, or of some specialized industrial inputs, of the dominant powers. These are economies that live in conditions of almost permanent external restriction, and of complete submission to the determinations, fluctuations, and adjustments of the economic policy of the great powers.

Argentina’s economic success, in the 19th century, took place in the shadow of England’s victorious affirmation as a naval, economic, and financial power, and can be considered as a pioneering case of England’s “development by invitation” strategy, unlike its “English speaking” dominions. Likewise, the Brazilian “economic miracle” of the 20th century can be classified as a case of “success by invitation”, or of “associated development”. But there were at least two moments, in the last 80 years, when Brazil tried to transition to an “insurgent” or catch-up model or strategy, with some positions that challenged the established international order. Firstly, towards the end of a military dictatorship that was extremely subservient and reactionary, with the exception perhaps of the foreign policy of General Geisel’s government; and secondly, at the beginning of the 21st century, between 2003 and 2015, with the foreign policy of the Lula and Dilma Rousseff governments, interrupted precisely by another coup that had American support and the decisive participation of the military and far-right civilian forces, as had already happened in the 1964 coup d’état.

After the resounding failure of the coup coalition and its ultra-liberal economic project, Brazil has democratically chosen a different path to be built by the electoral alliance that emerged victorious in the October 30 elections. Despite the destruction that the Brazilian State and society have experienced in the last six years, Brazil has already acquired an international dimension and weight that must resist and can be restored after the electoral defeat of the far-right conservative and ultra-liberal project. Even so, to stand up on its own legs and get out of the swamp to which it was taken by Bolsonaro’s chaos, the new Brazilian government will have to make choices and take some fundamental strategic decisions to enable the construction, internal and external support of a new model of society and economic growth, and a new strategy for the international projection of its national values and interests. It will also have to build a national power bloc and a flexible system of international alliances capable of sustaining its new project for the future conceived for Brazil. It should be clear in advance that when choosing this new path, the new government will suffer countless and continuous attacks coming from all sides, from inside and outside the country.

At this point, there is no mistaking: when proposing to ascend within the international system, it will inevitably have to question the status quo and the great geopolitical agreements on which the international order is based. As Norbert Elias said, within this interstate system, “whoever doesn’t go up falls”, but at the same time we must be prepared, because whoever goes up will always be blocked and attacked, inside and outside the country, and in an increasingly intense and coordinated way, for not submitting to the strategic will of the old owners of global power.(3)

November 2022

(1) Emeritus Professor of International Political Economy at Rio de Janeiro Federal University (UFRJ), coordinator of the CNPq GP “Global Power and Geopolitics of Capitalism” and of the “Ethics and Global Power” Laboratory at UFRJ; researcher at the Institute for Strategic Studies on Petroleum, Gas and Biofuels (INEEP) and contributor to the journals Cadernos Cris-Fiocruz, Informe sobre Saúde Global and Diplomacia da Saúde.

(2) Fiori, J. L.História, Estratégia e Desenvolvimento. São Paulo: Boitempo, 2014, p. 271

(3) Translated by Ana Silvia Gesteira.

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