Inflation figures recently released by the Brazilian Institute of Geography and Statistics (IBGE) exposed the reality that has slowly built up over the last few months: while the general consumer price index has increased by 2.44% over the last 12 months, food has increased by 11.39%. In this year along, food prices have risen by 6.10%.
According to the Institute of Applied Economic Research (IPEA), inflation for the poorest families increased in August by 0.38% while the highest income bracket experienced deflation of 0.10%. It is clear that those most affected by this situation are the most impoverished sectors of the working class, blacks, women and the LGBT community in particular. They are the ones who daily commit the biggest part of the domestic budget to food purchases.
As we will see below, this situation is the result of both the functioning of the dynamic of capitalist production and the political choices made by the Bolsonaro government.
Capitalist logic and rising inflation
The explanation of orthodox neoliberal economists for soaring food price inflation focuses on cyclical elements. They emphasize the appreciation of the US Dollar against the Brazilian Real, which makes exporting crops more attractive than selling them in Brazil. In a complementary fashion, they emphasize the increase in demand (both internal and external) in the context of the pandemic as a factor in the disequilibrium between supply and demand.
Bolsonaro has already publicly called for retail markets to reduce the prices of the products destined for the final consumer. In some way, this suggests that inflation arises from the greed and speculative activity of market owners.
Both of these insights highlight real aspects of the current situation. However, only pointing to causes such as momentary disequilibrium and/or individual behavior conceals the structural mechanisms in operation. In other words, they do not point to the fact that this situation is the result of the normal functioning of capitalist logic.
Rice illustrates this logic well, for even though Brazil is one of the ten largest rice producers in the world, prices for this product have skyrocketed. A five kilogram bag of rice, which until only recently sold for around 15 reais (reals) ($US2.75) now costs 40 reais ($US7.25). National rice production has shrunk significantly over the last few years. For example, between 2019 and 2020 the rice growing area in Rio Grande do Sul – where most of Brazil’s production is concentrated – has been reduced by 15%1. A good part of the land thus released is now used for the cultivation of other crops such as soybeans, whose prices on the international market are more attractive.
It can therefore be seen that the capitalist logic of profit maximization focuses not only concerns itself with the sale of products, but also affects the very determination of what will be produced. These choices, along with the absence of an effective grain storage policy, end up limiting the capacity to supply the country with rice.
This situation is aggravated by the structural external dependence that characterizes the Brazilian economy. It is this condition that explains both the devaluation of the Real and the high and growing weight of the agricultural sector in our economy. Unable to stimulate its economy with a significant degree of autonomy, Brazil sees the production of this sector become more and more oriented to foreign trade. It is only by considering the sum total of these structural factors that it is possible to understand the depth of the impact of the conjunctural elements and the extent of the acceleration of food price inflation that follows.
The dramatic nature of the social crisis
The surge in food prices occurs in the midst of a deep social crisis in Brazil. According to IBGE data, July saw the country have almost 13 million unemployed, five million discouraged workers (those who have given up looking for a job), 28 million underutilized workers (who would like to work more hours a week), and 34 million informal workers with next to no rights2.
The Bolsonaro government, consistent with its project of guaranteeing the profitability of capital by brutally lowering working class living standards, does nothing to improve this situation. Therefore, in the coming months, the tendency is for this situation to get even worse. Without any reaction from the government, mass layoffs have already been announced in several companies and sectors, such as Embraer (2500 workers) and private higher education teachers (1800 workers in the state of São Paulo alone)3. At the same time, Bolsonaro has already managed to reduce the amount of emergency aid from 600 reais ($US110) to 300 reais ($US55), close to his initial proposal of only 200 reais ($US36.50).
Faced with this scenario, the uncontrolled increase in food prices has the potential to generate a real catastrophe. Millions of working families are having to adapt their diet (generally by reducing their calorie and nutrient intake), or are simply being pushed into a situation of hunger.
For an anti-capitalist program that guarantees food sovereignty
This situation of generalized hunger in a country responsible for a significant part of the world’s food production can only be effectively overcome through the complete abandonment of capitalist logic. Instead of the search for maximum individual profit, it is necessary to build a social order based on maximum collective well-being.
Some examples of this alternative logic can be found in our here-and-now. For example, many of the Landless Workers’ Movement (MST) cooperatives that produce organic rice have already publicly declared that they will not take advantage of this moment to increase their profit margins at the expense of workers’ wages. This is why they are maintaining prices at pre-inflation levels. It is no coincidence that the MST and its cooperatives are also responsible for donating tons of food to the families of workers who were in distress due to the COVID-19 pandemic4.
Our challenge is to extend this logic throughout all of society and subordinate all social production to it. It is therefore a question of guaranteeing food sovereignty through democratic economic planning with the broad participation of the working class.
However, in the short term, some emergency measures are necessary to avoid an even greater social tragedy. These include: an increase in emergency aid to the value of the minimum wage; the prohibition of mass layoffs; agrarian reform that benefits small producers and the expansion of finance for family agriculture, the sector primarily responsible for the country’s food production; and the control of the prices charged by retail traders.
This program, which directly confronts the interests of various capitalist sectors, can set the working class in motion through the defense of its immediate interests. At the same time, it points to the possibility of building and strengthening a social order that goes beyond capitalism. The first step towards its concretization is the formation of an effective United Front of urban and rural workers, through their parties, movements and other entities, such as the Party of Socialism and Freedom (PSOL), Brazilian Communist Party (PCB), Workers’ Party (PT), Communist Party of Brazil (PCdoB), Homeless Workers’ Movement (MTST), Articulation of the Indigenous Peoples of Brazil (APIB), Landless Workers’ Movement (MST), black, feminist and LGBT collectives, etc.
NOTES
1. Bruno Cirillo, “Arroz chega a custar R$ 40, e setor diz que preço deve continuar em alta” (The price for rice reaches R$40, the sector says prices will continue to rise), UOL website, 8 September 2020, https://economia.uol.com.br/
2. Marina Barbosa, “12,8 milhões de brasileiros estão desempregados, aponta IBGE” (12.8 million Brazilians are unemployed, the IBGE points out), Correio Braziliense (Brazilian Mail) website, 28 May 2020, https://www.
3. “Embraer vai demitir 2,5 mil funcionários nas fábricas do Brasil” (Embraer sacks 2500 employees from its factories in Brazil), G1 (Globo News) website, https://g1.globo.com/sp/vale-
4. “MST anuncia que manterá arroz orgânico a um preço justo” (MST announces that it will maintain a fair price for organic rice), Sul21 website, 12 September 2020, https://www.sul21.com.br/
This article is an English translation of “Inflação atinge os mais pobres”, Esquerda Online (EOL), 17/09/2020.
Translation: Bobby Sparks
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