“One of the few events which give hope for the rest of the 21st century.” This is how British radical historian Eric Hobsbawm greeted the Brazilian Workers Party’s election victory of October 2002. Led by the charismatic Lula, the party garnered 53 million votes as Brazilians rejected the neo-liberal policies of the previous president, Fernando Henrique Cardoso.

Cardoso’s neoliberal policies of wholesale privatization of state industries and the erosion of social services created widespread discontent with his government. Eight years later, Brazilians find themselves worse off than before and still drowning under an external debt that has ballooned to $300 billion.

But Lula’s victory was no overnight success, rather it was based upon 20 years of struggle to build a party whose priorities are not dominated by the dictates of capital. In this article we’ll look at how the Workers Party was built and its prospects in power.

Totalitarian impetus

In 1964, the Brazilian military took over the governing of the country. They did this for two reasons. First, they believed that the then President Goulart intended to introduce a form of communism by extending the role of the state; two weeks earlier he had called for a radical redistribution of land to the peasantry that had alarmed the Brazilian elite. Second, the military wanted to transform Brazil into a modern capitalist economy.

In order to achieve their first goal all political parties were banned, as were direct elections for the president and the vice-president. In their place the military established two parties, the National Renovation Alliance, which was to support the new regime, and the official opposition, the Brazilian Democratic Movement. The only political achievement of the latter was to record less votes than those cast as spoilt ballots.

Economic expansion was realized by the concentrating of capital in the hands of large national and foreign businesses. During the period 1968 to 1974 Brazil increased its Gross National Product by an astonishing 11% every year, a figure that was unmatched by any other country. The military was able to attract multinational companies of the caliber of Ford, Chrysler, Mercedes and Saab by delivering a poorly paid, docile workforce – in 1968 the Fifth Institutional Act was passed, which closed the Congress, suspended the constitution and further tightened press censorship.

The beneficiary of the newly created wealth and the fierce repression was the Brazilian ruling class: the top 10% took 75% of that wealth while the poorest 50% had to make do with just 10%. In 1972, President General Emilio Garrastazu was forced to admit, “The economy is going well, the people not so well.”

While the generals were very effective at regimenting the workforce, they were unable to control the world economic market on which their economic miracle depended. When the world economy went into sharp recession in 1973, the Brazilian economy followed it. To overcome their problems and sustain the economic expansion, the Generals turned to the international banks. The debt ballooned from $4.4 billion in 1963 to $54 billion in 1980, which ate up 25% of export earnings.

The end result of the military’s economic policy was two-fold. On the one hand they left Brazil dominated by foreign businesses and the evil policies of the World Bank and the International Monetary Fund. On the other they brought into being one of the world’s largest working classes. It was the combination of these two that finally ended military rule in 1985.

Humble origins

The beginning of the general’s demise was the wave of strikes that broke out in 1978. Centered in Sao Paulo they hit the generals where they were most vulnerable – in the industries that generated export earnings. The strikes were led by a new generation of union leaders, known as the new unionists. The new unionists came from the industries at the heart of the Brazilian economy – metal workers, leatherworkers, oil workers, bank workers and electric workers. They wanted a return to democracy, the unrestricted right to strike and the dismantling of the repressive labor code that had been modeled on Fascist Italy during the 1930s.

Key among the new leaders was Luiz Inacio Lula da Silva. Up to this point Lula’s life was identical to millions of his fellow workers. Born in 1945 in an impoverished northeast town, he migrated to Sao Paulo with his mother and siblings in 1952. This was a journey undertaken by an estimated 24 million in 40 years. Their experience was identical: they left the grinding poverty of rural life for the cities where they were sucked into the big industrial centers the generals had built. Life here was not much easier but at least during the period of economic expansion, jobs were plentiful and stable, even if they were low paid and dangerous (Lula lost the little finger of his left hand to a machine).

Lula started his industrial life at the age of 13 and was lucky enough to become a skilled engineer. Perhaps what marked him out from the majority of the workers in Sao Paulo was his brother who was a member of the Communist Party and talked incessantly about the need for unions. While Lula maintains that he had no interest in politics or the unions that were considered by most workers to be corrupt and impotent, he did allow his brother to take him to a union meeting in the early 1970s. In 1975, after a short union career, he was elected president of the metal workers union with 92% of the vote. He was nominated by outgoing union president Paulo Vidal, who he believed had ulterior motives: “When Paulo agreed to nominate me he was planning to prove…that he was irreplaceable and that I was a shit and couldn’t get a damn thing done.”

The 1978 strikes unleashed the pent up frustration felt by workers during the generals’ years in office – not the least of which was the 34% fall in living standards that had occurred between 1973 and 1974. The strikes started at the Saab-Scania plant where Lula led workers out to demand a 20% pay increase above inflation; the movement spread to 80,000 workers. Union meetings had to be held in a soccer stadium to ensure that every striker could attend. The strike caught the government by surprise and they were forced to concede pay increases of 24.5%. The example spread across the country and by year’s end, 500,000 workers had taken strike action across the country and broken the generals’ wage controls.

In 1979, workers again took to the streets hoping to replicate their successes of the previous year. But while the 1978 strikes had badly shaken the generals, they had not delivered a knock out blow and this time around they were determined to break the strikes. Again workers responded to the strike call in large numbers, 3.2 million workers were involved in 113 strikes. However, this time they faced severe repression. The strikes were declared illegal, the soccer stadium was put off limits, churches that provided meeting space for the strikers were invaded by the army, union militants were physically attacked, union leaders were arrested. Ultimately, the strike was broken and workers returned to work with a 15% pay increase, far below what had been demanded.

For the new unionists, there were a number of lessons to be learnt from the 1979 strikes. First, the bosses could not be trusted; despite promises that workers would not be victimized, on returning to work union militants were fired. Second, opposition politicians, despite their rhetoric, would not support the union. Third, the state was squarely on the side of the business class and would use any level of violence to protect their interests.

Out of these lessons the unionists decided it was necessary to launch a political party that would represent their interests – on February 10, 1980 the Workers Party (PT) was born.

Initially there was no clear idea of what the Workers Party would be. While for some it would be a classical labor party whose main orientation would be contesting elections, for others, including Lula, the party was an organization that was to augment the social movements and was part of the struggle to establish socialism in Brazil. Regardless of the inability to clearly define it, the PT was a clean break in the political history of Brazil in that it was a party to be led by and represent the interests of only one class – the working class.

Prior to its launch, the Brazilian working class had been dominated by populist politics. At election times, politicians of the ruling elites would make promises of social reform and hold big rallies where food was supplied, one of the few times that many workers got to eat meat. Once the votes had been secured, the promises of social reform were forgotten until the next election. The PT promised to put a stop to this and build a party that would reflect the true interests of Brazilian workers and peasants. To remain true to this philosophy, the PT has not hesitated to expel elected representatives who do not follow the PT program.

Building the party

In the early 1980s the PT’s strength lay in the Sao Paulo area where the majority of its members worked – in the 1982 elections 71.3% of the party’s vote came from here. Throughout the decade it began to build support in the interior where a large peasantry lived in conditions of extreme poverty. It was able to do so because it proved itself committed to land reform.

Under the generals’ rule conditions in the countryside had become much worse. Large tracts of land were given to domestic and foreign capitalists with no regard for who lived and worked on them – 95% of all arable lands were owned by 5% of the population. Most peasants suffered in the same way; they would find themselves a piece of land, clear it and make it productive and then a landlord would appear and tell them that they were on his land and had to leave. If they refused to do so, the landlord would send gunmen to murder a few campesinos and drive the rest away.

However, by the time the PT arrived a new mood had swept the peasantry who were less willing to meekly tolerate the landlords’ abuses. Part of this can be attributed to the role played by the church. Liberation theology has a strong presence in Brazil and many priests gave their lives in the struggle to improve the lot of the peasantry. In doing so, they built a network of Christian Base Communities that organized the peasantry and developed schools, health facilities and improved agricultural methods. By 1980, 100,000 communities existed – many became supporters of the PT and enabled the party to achieve a truly national presence.

Throughout the 1980s, the party contested elections. Initially the PT did not do very well. But this began to change in the late 1980s. By 1988, Brazil was gripped by a deep social and economic crisis. Inflation was close to 1,000%, poor people fought garbage collectors over trash. In 1987 when the mayor of Rio announced a 50% increase in bus fares, riots broke out. Throughout this the PT was the only party to support the demonstrations and strikes. This paid off in 1988 when the party won elections in some of Brazil’s major cities including Sao Paulo, Porto Alegre and Vitoria. In all they controlled cities populated by 15 million Brazilians, 10% of the population.

Contradictions of power

The PT’s record in municipal government is mixed. The first striking thing about the PT in power is that many of their mayors are women – a first for any party in Brazil. When Luiza Erundina was elected mayor of Sao Paulo she was faced with a bankrupt city with a debt of $1.5 billion. Nevertheless, she built five new hospitals, renovated 137 healthcare facilities, increased the number of children going to school by 20%, opened 300 youth centers, built new parks and libraries and ensured that shanty town dwellers were serviced by sewage, clean water, gas and electric.

However, to achieve this, she had many fights with the city’s workforce. In one incident she replaced the municipal bus service with 50 private companies at the cost of 3,000 jobs. Similarly, during the general strike of March 1989, Erundina fined striking workers one day’s pay for every day of work they missed.

The problem confronting Erundina—and all other PT mayors—is that Brazil as a country fully integrated into the world economy, is not free to make its own decisions. Each local administration has to pay 40% of its income to the international banks as part of their payment toward the national debt – such a large amount means that local governments are left to determine which services get funded and which do not. It forces them to make decisions such as should city workers get paid or should shanty dwellers get clean running water; should sewers be repaired or a hospital kept open.

The much-heralded participatory budget of Potro Alegre enlists NGOs trade unions and other social groups into making such decisions as those above. One critic of the budget, Joao Penha, has written of it, “They are asked to determine how to distribute the budgetary shortfall; that is, they are co-opted directly into the administration of poverty. That is why PT activists across Brazil who disagree with this model have dubbed it ‘participatory austerity.’”

Penha’s description of the Porto Alegre participatory budget sounds very much like the classic social contracts that the European Social Democratic and Labor parties put in place during the mid-1970s. These contracts were successful in that they tamed working class opposition to austerity measures needed to protect the profit rates of European businesses. The contracts also discredited the European left in the eyes of their supporters and helped usher in nearly 20 years of right-wing rule in many countries – Britain under Margaret Thatcher being the prime example.

However, it would be wrong to conclude from this that Lula and the PT face the same fate. The European left parties came to power at a time when the anti-capitalist movements of the 1960s were on the retreat and were able to mount only limited opposition to the wage freezes and cuts to social services. Lula is set to take over a country that has a multitude of confident social movements that promise to fight, not only to defend their gains of the past few years, but to extend them. Similarly, Latin America is the sight of rising social movements that are contesting capital’s unfettered rule. The contrast with the mid-1970s Europe could not be greater.

The trajectory of Lula’s administration will be decided by the outcome of the battle between international capital’s thirst to exploit and the social movements’ vision of a just society that meets people’s needs. Unfortunately, Lula’s history as leader of the PT has been one of vacillating between his supporters and the demands of Brazilian and international capital – the selection of a textile tycoon as his vice president is but one example. Ultimately, whichever side brings the greatest pressure to bear on the PT administration will win the day.