Selling neoliberalism: Brazil's Instituto Liberal.

In the 1980s more and more Latin American countries attempted to address daunting economic problems with variations on the so-called neoliberal theme. While one should have expected governments to implement home form of short-term fiscal and monetary adjustments to address the region's generalised fiscal crisis, it was less inevitable that this neoclassical formula should coincide with a more long-term structural adjustment formula, including such neoliberal (or neo-orthodox) policies as privatisation of State-owned companies, liberalization of tariffs, and reduction of the public sector workforce.(1) As a result of this policy mix, normal recessionary impact of adjustment intensified. The clamour for protection from that impact, and/or for putting an end to the policies themselves, has also intensified not only from the popular sector (that perennial target of all adjustments), but from the ranks of economic elites as well.

All of this has occurred within generally fragile democratic regimes, mostly formed in the wake of years of authoritarian rule. Given this fragility, on the one hand, and the historical affinity between politically disruptive adjustment programs and non-democratic means of implementing those programmes,(2) on the other, two questions naturally suggest themselves to those who care about democracy in Latin America: (i) how (and why) did neoliberals organise themselves for democratic politics; and (2) just how strong were the democratic credentials of these |new' neoliberals?

The first of these questions is eminently empirical. Political organisation is as much a response to the possibilities of effective political expression -- the political spaces that may or may not exist in a given case -- as it is to organisers' visions of the best way to fill those spaces. This article examines one instance of neoliberal organisation for democratic politics: an organisation of neoliberal businessmen and professionals in Brazil, the Intituto Liberal, whose leadership saw itself engaged in an ideological struggle over the guiding vision of Brazil's economic future.(3) It addresses the second question about democratic credentials by comparing the results of research into the leadership of the Liberal Institute, especially that of the Liberal Institute of Sao Paulo, with an account of business elites' organised political participation in the years preceding the 1964 military-led breakdown of democracy in Brazil. It concludes that, from the standpoint of the early 1990s, the democratic credentials of the latter day neoliberal leadership were both strong and sincere. This conclusion, however, is not based on any sense of their intrinsic democratic morality (although there is plenty of reason to believe in their sincerity). Rather, it has to do with the economic-structural and political context of the late 1980s and early 1990s which made democracy along with some form of neoliberal reform |the only game in town'. For the then-foreseeable future, there appeared to be no legitimate alternative economic projects, such as socialism or developmentalism (military- or civilian-led). The struggle over ideas about Brazil's economic future could, therefore, remain at the level of democratic debate and the organised |marketing' of ideas rather than becoming polarised into violently antagonistic camps. Finally, this article suggests a generalization extending to all advocates of neoliberalism in Brazil at such a time: as long as the uncertainty of any potential gain from a return to authoritarian politics was perceived to be more than offset by the very likely losses from such an event, |inefficient' democratic politics and long-term strategies aimed at changing the way people perceive economic and political relations would be preferred to non-democratic and |quick fix' technocratic solutions. Donald Stewart is a civil engineer and president of Ecisa, a large construction firm based in Rio de Janeiro. In 1980, Stewart obtained an English edition of Friedrich Hayek's The Road to Serfdom. Hayek's linking of authoritarian political structures and interventionist economic policy made a profound impression on Stewart, as it seemed to him to fit the Brazilian case quite closely. At that time, his son was entering Rio's Catholic University and was being asked to read, according to his father, nothing but Marxist-inspired literature. Stewart had a visceral response:

I felt perplexed and frightened at the type of books he was having to read -- false and dishonest. This was not academic training, but indoctrination.(4)

But …