Highlights from a new biography on Fernando Henrique Cardoso
Fernando Henrique Cardoso was shocked when he got the news from friends that he had been appointed Finance Minister. He immediately called President Itamar Franco to complain. Franco could only say, "the public response has been excellent."
"This is my bible, I read this book every day in order to get angry." Fernando Henrique Cardoso and his colleagues were concerned when these words were spoken on television by the São Paulo security chief, Colonel Erasmo Dias. Irate attacks can be good for book sales, and their analysis of urban poverty in the midst of Brazil's economic boom needed all the publicity it could get. But it was dangerous to be so visible at a time when leftists were often tortured by the police and sometimes even "disappeared." Shortly after the Colonel's denunciation, in 1975, an anti-Communist group set off a bomb outside their sociological research institute.
Cardoso was called to military police headquarters. At the entrance, he was blindfolded and taken to a room where he was interrogated. When he had to go to the toilet, they forgot the blindfold and led him through a room where a man was being tortured. All he could think was "What an idiot I am, I should have stayed abroad. There I am a friend of the king." After his release, the incident abraded on his mind. It was still bothering him three years later, when he received an honorary degree from Rutgers University in New Jersey. His hosts placed a cap and gown over his head and shoulders, which reminded him of the blindfolding, and he could not get the memory out of his head for the remainder of the ceremony.
The interrogation itself was a dialog of the absurd, focusing on a meeting he had with Earnest Mandel in Mexico City. Mandel is a prominent Belgian intellectual, who happened to be active in an insignificant Trotskyist movement. The inquisitors asked Cardoso a long series of questions about his meeting with Mandel, not believing that it was purely a discussion about social theory. They had met at the airport, and Fernando Henrique had carried Mandel's wife's suitcase while they chatted between flights. Cardoso was interested in Marxism as social theory, not as political dogma.
Twenty years later, Cardoso was taken by the military to the Fortaleza de Lajes, near Rio de Janeiro. As the soldiers clustered around him, eager to meet their new President, he told the accompanying Admiral, "my father was imprisoned in this stone cell here." Leôncio Cardoso was an officer in the Brazilian army who had been briefly imprisoned for his support of a democratic revolt. After his retirement, as brigadier general, Leôncio served a term in Congress as part of a group organized around the slogan "from the empty cooking pot and the dry water fountain." This referred to life in shantytowns where food is scarce and water must be carried up steep hills. Leôncio was a genial, kindly man who was glad to have his son go into sociology instead of following the family's military traditions.
In Brazil everyone who counts is on a first name basis, and every effort is made to find a way to solve problems informally. Reversals of political fortunes are not uncommon. But Brazilians never before elected a sociologist president, let alone one who had been banned from teaching as a subversive by the military government. But Cardoso has the military to thank for many of the twists of fate which made him the world's first sociologist to rule a nation.
He was well on his way to a distinguished but conventional academic career when the military overthrew the Brazilian government in 1964. He went into exile in Chile where he got a wonderful job with a United Nations research institute, enjoying what he later called the "bitter caviar of exile." Colloquy with brilliant colleagues from all over Latin America broadened his horizons and he co-authored a book on Dependency and Development in Latin America, which revolutionized thinking in the field. After a brief visiting professorship in Paris, he returned to São Paulo where he won a Professorial Chair in Political Science at his alma mater, the University of São Paulo.
Once again his plans to settle into a quiet academic life were upset by the military, who purged him and many of his most distinguished colleagues during a crackdown on the left in 1968. The purged professors were prohibited from teaching anywhere in the country, but in characteristically genteel Brazilian fashion, they were "retired" at full pay, giving them in effect a lifetime sabbatical. They took the opportunity to open an applied research institute, which made them much more effective in pressuring the military regime.
The military canceled the political rights of many of the established democratic leaders, and set up a two party system in the hope that this would provide a harmless outlet for dissent. In fact, the new system forced the opposition to unite instead of bickering among themselves as they had in the past. When the economic boom ended many opposition politicians were elected to important offices. There was a shortage of leadership, however, because the military had canceled the rights of many of the best known politicians.
Fernando Henrique was an advisor to the opposition party, and was well known as an essayist and journalist. The Brazilian electoral system allowed multiple candidates for the same position from the same party, and he was asked to join a slate led by a well-known democratic politician, Franco Montoro. Montoro was running for the senate, and he wanted to reach out to the intellectuals on the democratic left. Cardoso campaigned hard, with no thought of winning for himself, but when he came in second he learned that this made him the "alternate" senator who would take office if Montoro died or retired. Two years later, Montoro ran successfully for governor, and Fernando Henrique succeeded to the senate.
In his debut speech to the Senate, Cardoso quoted from German sociologist Max Weber's Politics as a Vocation on the need to achieve the possible by attempting the impossible and from Goethe's Dr. Faust on the twisted, deceptive nature of a world in which many have sold their souls to the devil. So it was in Brazil, he implied, where the struggle had been long, progress slow, and many ideals had to be compromised.
Hopes were high when the military returned to the barracks, but the politicians reverted to many of the practices, which had led to the breakdown of democracy in 1964. They voted massive patronage spending for their friends and allies, greatly inflating the currency. As senator, Cardoso was a member of the Constituent Assembly, which created a new democratic constitution in 1988. He found it a very frustrating process. At one point he chastised the politicians for fiddling while Rome burned, wasting time in useless bickering, failing to exercise "the most elemental responsibility of the politician: to respect common sense, the good sense of the man of the streets, without which we will not have representativeness or, for that matter, democracy."
Cardoso was aghast at the direction the Constituents were taking. He thought they were leading Brazil backwards, sailing against the winds of history. He told the senators that, choosing development implies a process which, for lack of a better name, I will call `modernization,' but which in truth is the `globalization' of the economy. In an era when Europe is integrating its market by means of a multiplicity of joint-ventures with the Soviet Union, in which China is `westernizing,' Japan is already a part of the `western' world, and the United States is forming a great market in North America, together with Canada and Mexico, Brazil cannot isolate itself, anachronistically, with an outdated policy of autarchy which runs the risk of turning it into a huge Cambodia.
If any of Cardoso's colleagues from the academic left in the 1970s had heard this speech, they would have been astounded. For them, "modernization theory" and "dependency theory" were polar opposites, and Cardoso had built his academic reputation as a leading exponent of what they called "dependency theory." But for Cardoso, dependency was a topic of study, not a theory. His studies showed that the world had changed, and Brazil had to change with it.
In the end, he was forced to accept a compromise with leaders who were well intentioned but, in his view, unrealistic. In 1988 he observed "the basic principle of the constitution which we are elaborating is the establishment of a welfare state. This is an ancient aspiration of the Brazilians... all the developed countries have a welfare state, and it is just that we make a Charter with this concern. The problem is that, thirty years later, the welfare state in the developed countries has become the fiscal crisis state, the state threatening to go into default. What I think is that after the promulgation of the new constitution, we will have to make adjustments, because the Brazilian state entered its fiscal crisis, a state threatening to go into failure, before it began to promote well-being. I am certain that this will not be easy. I am certain that it must be done."
Seldom have a politician's remarks been more prophetic. What Cardoso had no way of knowing was that he would be called upon to lead the nation in making the changes he had predicted. By 1993 the inflation had gotten completely out of control with prices doubling every month. Inflation had long been a way of life in Brazil, and people had done their best to adjust to it. Bank accounts, tax bills, many salaries and other payments were indexed, so people's debts and incomes were automatically adjusted to compensate for the declining value of money. This worked fairly well for middle class people, but great mass of people who lived from paycheck to paycheck saw the value of their money deplete from day to day. Price changes were erratic, and no one knew what a product or service would cost in two weeks. When people received money they rushed to spend it as quickly as possible before it lost its value.
Because of the elaborate indexing mechanisms, people could live with inflation from month to month. But in the long run, indexing was self-defeating because each new price rise automatically caused other prices to rise. There was the risk that the vicious cycle would get out of hand and money would lose its value altogether.
Cardoso had accepted an appointment as Foreign Minister, a post for which he was well prepared and which he thoroughly enjoyed. He was completely shocked when on May 19, 1993, during a visit to New York City, he received a surprise telephone call from President Itamar Franco. The call, at 11 on a Thursday evening, caused a cheese soufflé to collapse in the oven at the home of the Brazilian ambassador to the United Nations, just as Cardoso was enjoying a toast of fine French wine. The ambassador's wife couldn't object too strenuously when she heard that it was an urgent call from the President. President Franco asked Cardoso if he was standing or sitting down. He sat down, anticipating a long conversation.
Franco informed him that in a few minutes he was going to ask finance minister Eliseu Resende for his resignation. This was not surprising because the Finance Minister is the one who is blamed whenever inflation gets out of control and the Franco government had proved completely incapable of controlling inflation. Cardoso expressed his regrets at the need for another change of Finance Minister only six months after the forced resignation of the previous President, Fernando Collor de Mello, on charges of massive corruption.
President Franco then came directly to the point, asking "would you agree to be Minister of Finance?" Cardoso wavered, saying he was quite satisfied in the foreign ministry, and that he thought it would be better to persuade Resende to remain, rather than upset the system with another sign of instability. But he was not in the country, and he didn't know the details of the situation. Itamar was the President, and the final decision was his. Itamar said he would get back to Fernando Henrique as soon as he had talked with Resende.
President Franco was at his wit's end about the inflation numbers, and there were persistent rumors that he was thinking of resigning. With great relief, he took Cardoso's response to mean that he would accept the position if formally asked to do so. This was not what Cardoso had told his closest political advisor Sérgio Motta who had alerted him that he was being considered for the job. Motta thought Cardoso should take the job, but he replied "you're crazy, I'd never take that thing." Another close associate, José Serra, was afraid that if Cardoso accepted the job, without assurance that he would have the resources necessary to end inflation, he would ruin his own electoral prospects and bring the rest of the Social Democratic Party down with him.
Cardoso's wife was hurt to learn that he had accepted the position without consulting or even telling her, but he told her he hadn't realized he had accepted it himself. Based on Cardoso's polite non-refusal, President Franco had gone ahead and ordered the appointment published in the Diário Oficial. Cardoso was shocked when he got the news from friends that the appointment had already been made. He immediately called President Franco to complain. Franco could only say, "the public response has been excellent."
Cardoso was a sociologist, not an economist, and he had no special expertise on monetary policy. But as a sociologist he realized Brazilian inflation was more than an economic problem, it was deeply rooted in the national character and the nation's social institutions. Writing during the epoch of hyperinflation, the Brazilian psychoanalyst Joel Birman observed that "inflation causes a devastating impact which can be seen in the progressive deterioration of the conditions of existence of the great majority of the Brazilian population."
Most disastrous, in Birman's view, was an increase in interpersonal violence, which had become a "basic attribute and trademark of Brazilian life." People felt impunity from social control, death lost its tragic dimension and a feeling of horror "impregnates the totality of interchange between people." Everyday life presented itself as "a nightmare on the edge of chaos." As a result of this feeling of horror, hopelessness had become the predominant mood in Brazil, and cynicism the predominant ethic.
This feeling of helplessness about inflation penetrated into the highest ranks of government. Adding to the irritation was the fact that other nations had ended severe inflations, including, in recent years, Israel, Bolivia and Argentina. Cardoso simply refused to believe that Brazil could not do what these nations had done. If he had believed that Brazil was hopeless as a nation, he could have emigrated to Paris in 1969 and enjoyed the perquisites of a professorship at the Collège de France. He wasn't about to hide in the Foreign Ministry, now that the President of the Republic had challenged him to take on the nation's most vexing problem.
But what to do? The logical first step was to put together a team of the country's sharpest economists, even though most of them had worked on previous unsuccessful plans. Cardoso recruited Edmar Bacha, Pérsio Arida, André Lara Resende and Gustavo Franco among others. They were highly qualified, with Ph.D.'s in economics from leading world universities, and with experience in the struggle against Brazilian inflation. They had learned from their past failures, but they were not at all certain that they could succeed. Edmar Bacha thought "the best we can do is avoid a hyperinflation, if we do that we will have done much." Bacha had been involved in creating President Sarney's Cruzado Plan, and the failure weighed heavily on him. When Sarney took office, inflation was 225% a year, when he left it was 80% a month. Some economists called this a "hyperinflation," but Bacha feared an inflation so great that people would have to carry bills to the market in suitcases to buy groceries.
Bacha refused to accept the job unless he could commute into Brasília on Tuesdays and leave on Thursdays. He was concerned about his own career if he became too closely tied to another failed plan, and wanted to keep other options open. At the first meeting of the economic advisory team, however, he plunged right in with a proposal, which became the core of what became known as the Plano Real. He suggested a temporary dual currency system, in which all contracts, including salaries, would be continually readjusted to their value in U.S. dollars. To make the readjustment, he proposed using the indexing system, which people already understood. This meant change could be implemented very quickly. Using a government index also preserved a degree of national autonomy, since prices would not be permanently linked to the dollar, as Argentina had done. Once everyone was used to calculating money in this new unit, new currency could be printed which was valued in those units. Brazil would have a hard currency.
Cardoso's mood improved. He became less serious, more cheerful. His advisors sensed that he really thought they might actually slay the dragon of inflation. Of course, the new currency would not be a permanent solution unless more fundamental changes followed. The automatic readjustment of prices and wages would have to be ended. Government spending would have to be brought under control, despite the mandates of the 1988 constitution. Without these more fundamental reforms, the new reform would prove only a temporary gimmick and the government would have no choice but to print money to pay its bills.
The economists were skeptical, not because they didn't think their economic plans could work, but because they doubted that Cardoso could mobilize the political clout to implement them. Their pessimism was rooted in years of hard experience. Cardoso understood why the past efforts had failed, despite excellent technical advice by the same people who were advising him now. But he thought they could succeed because of the feeling of desperation in the political establishment. He thought that "it would only be possible to conquer inflation in a moment of political weakness. Only in a moment of political weakness could the minister of finance assume the powers necessary to impose the difficult measures necessary to control inflation." He took full advantage of this window of vulnerability and got Congress to pass a Social Emergency Fund giving him control over the government's key finances. It wasn't really a fund, nor was it devoted to social programs, but the emergency was real enough.
One week after the Social Emergency Fund was passed, the government was thrown into a foolish mini-crisis when President Itamar Franco was photographed holding hands with a beautiful young actress on a podium in the Samba Stadium in Rio de Janeiro. It was in the middle of the Carnaval celebration, when Brazilians put aside their inhibitions for a week of dancing and revelry. The young lady was so much in the spirit of the event that she was wearing only a short skirt and no underpants, a fact which was not apparent to the President, but was all too visible to the press who photographed the young lady from beneath the podium.
Many of the military officers felt that the publication of these photographs so compromised the dignity of the Presidency that Itamar should be removed from office, although he was hardly responsible to check the undergarments of young women he met at perfectly legitimate public functions. Cardoso was profoundly disturbed that this trivial episode should put Brazil at risk for a coup d'état.
Finally, a compromise was worked out. Itamar agreed to dismiss his Minister of Justice, who had displeased the generals, as a token of his repentance. Since it was not thought appropriate for a military man to openly dictate policy to the president, Cardoso was asked to be the messenger. He was selected because the military thought him dignified and unquestionably respectable, in contrast to several other senior officials of the government. President Franco accepted the solution, allowing the Minister to announce he was leaving so he could run for elective office. Later he changed his mind and remained.
Cardoso often seems a bit stiff and formal in his public demeanor, perhaps reflecting his upbringing in a military family. He usually dresses formally, and looks very much like a corporate executive. This personal style puts him at a disadvantage in campaigns against politicians with a more populist manner, but it serves him well with the military men, as well as with businessmen. His proper demeanor also serves him well on those rare occasions when he is caught in what might otherwise have been a compromising situation, such as when he was photographed being kissed by a drag queen in the 1993 Carnaval celebration. Fortunately, the celebrant was fully clothed, and Cardoso looked suitably embarrassed in the newspaper photographs.
The Plano Real succeeded brilliantly because it was the right plan at the right time. As Cardoso remembers, "the society got tired of inflation. There came a point when they were fed up with it. At that point, we needed something to close the circuit. That was the Plano Real. We took a chance on it, and we won because the country understood. It was fantastic. Within a week, everyone knew what it meant."
This smashing victory over the curse which had plagued Brazil for decades made Cardoso the overwhelming favorite in the presidential elections and on October 3, 1994, he was elected President of Brazil with 54% of the vote. The charismatic champion of the Workers' Party, steelworkers union leader Lula da Silva, received 27%, with the rest split among several candidates whose campaigns never took off. Cardoso won every state except for Rio Grande do Sul and the Federal District. Surveys showed him leading among all social classes, although with a stronger margin among the wealthier voters. Since Cardoso won more than half of the total vote, there was no need for the usual runoff election.
(...) The critical intellectuals remain petulant, complaining that the Cardoso administration is boring and predictable. His leftist critics, within Brazil and abroad, are unhappy that he has not solved more of the nation's problems. They point to rural and urban poverty, the diminishing of the Amazon forests, pollution of the environment by illegal gold mining, murders of street children by police death squads, displacement and even extermination of Indian tribes, and other appalling problems which persist in Brazil.
No president, however, could eliminate these problems by decree, as many of his critics seem to assume. As an elected democratic leader, Cardoso has to work through the Congress, which is responsive to pressures from the middle class and organized pressure groups. Cardoso would like his administration to be the government of the marginal and excluded groups, but that this is not possible, given political realities.
In some ways, Cardoso is working against the grain of Brazilian culture. His fundamental goal is to build democracy. He wants people to work together to make compromises and resolve conflicts, but he finds that many Brazilians do not want to do that. They want the President to impose a solution in their favor. Brazilians have a weakness for strong leaders who impose their will. People tell Cardoso that he is isolated in the Presidential Palace, not talking to anyone. But he told me that he "talks to everyone," but he finds that each group wants him to listen only to them. He fears that democracy is still tenuous in Brazil because people have limited patience for the compromises needed to solve problems democratically.
Cardoso's thinking is similar to that of the American pragmatist philosopher Richard Rorty. Rorty argues that "the Left should put a moratorium on theory. It should try to kick its philosophy habit." Instead of getting lost in abstractions such as "postmodernism" or "neoliberalism," Rorty argues that the Left should focus its energies on "campaigns" or movements for specific, tangible objectives. Rorty uses American examples such as the eight-hour day, universal health insurance, and voting rights for women and minorities. In Rorty's view, political life follows no predictable agenda and leads to no dramatic conclusion. It is a "tissue of chances, mischances and lost chancesa tissue from which, occasionally and briefly, beauty flashes forth, but to which sublimity is entirely irrelevant."
Cardoso's career has been just such a series of "campaigns" to accomplish Brazilian objectives: direct elections, a democratic political party, a new constitution, a stable currency, pension reform, administrative efficiency, improved primary education, and so on. Ironically, Cardoso won the presidency because his conscientious, pragmatic, problem-solving approach happened to lead to a dramatic and even sublime moment of social transformation: the end of hyperinflation. Solving inflation was a campaign he undertook because it needed doing and President Franco asked him to do it. It was not his area of professional expertise, nor had he ever anticipated making a contribution in that way.
Ending inflation was a tremendous boon for the people of the empty cooking pot and the dry water fountain that Leônidas Cardoso had been struggling to help when Fernando Henrique was coming of age. Cardoso remains popular among the poor, despite the criticism of the intellectuals and the civil servants. He says, "I am more popular among the poor than among the rich. For two reasons: first, because the control of inflation has permitted them to eat, and, second, because there has not been even a hint of corruption."
The balance sheet of Cardoso's achievements is remarkable by any standard. Inflation has been ended while raising the standard of living of the poor and imposing a minimum of austerity on everyone else. The economy is being reorganized on a sound basis, in keeping with state-of-the-art economic principles. The bureaucracy is being cut back and reformed, and human services are being reorganized and developed.
The country remains vulnerable to global economic forces, and difficult domestic problems remain. But the same can be said of other countries, including those with wealthier economies and more established democratic traditions. (...) Fernando Henrique Cardoso will enter into history as the president who prepared Brazil to compete effectively with other countries in meeting the challenges of the twenty-first century. This is a remarkable accomplishment for a man who began his career struggling to adapt nineteenth century Marxism to twentieth century realities.
This text was excerpted from Fernando Henrique Cardoso: Reinventing Democracy in Brazil by Ted Goertzel, Lynne Rienner Publishers, $19.95 in paperback or $49.95 hardcover. For details on the book, or to order a copy, go to the publisher's catalog page at http://www.rienner.com/goertzel.htm A supplement to the biography of Cardoso can be accessed on Ted Goertzel's WEB site at http://crab.rutgers.edu/~goertzel/supplement.htm
Ted Goertzel is a Sociology professor at the Rutgers University in Camden, New Jersey. He is the author of several books, including Linus Pauling: A Life in Science and Politics and Turncoats and True Believers: The Dynamics of Political Belief and Disillusionment. You can contact him through his E-mail: firstname.lastname@example.org