Believing in (Economic) Miracles in Brazil and Chile

Japan’s economic miracle began in the shadow of a mushroom cloud. So argued Joelmir Beting, the economy editor of one of Brazil’s leading newspapers, in July 1970. Beting was intrigued by the former Axis power’s sustained postwar economic growth. The kamikaze pilot, “who in the name of the fatherland launched himself at the sides of enemy aircraft carriers,” had been replaced by the Japanese worker, “the kamikaze of the economic system, a man who works ten hours a day, has four vacation days per year, whose retirement is only 2.9 dollars per month, merely symbolic, which leads the worker, while still young, to save a third of his salary and invest it in fixed income securities or shares, to have something to live on in his old age.”1 Such discipline and self-sacrifice, Beting suggested, was central not just to Japan’s reconstruction following the devastation of World War II but its rise to global economic stardom.2 Between 1955 and 1973, the Japanese economy grew at roughly 10 percent a year on average, an impressive rate by any standard. Surely Brazilians might learn from the technocratic “samurais in suits.”3Beting’s Orientalism was interlaced with a subtler, vaguely spiritual notion: that miracles are born of suffering.4 From this perspective, Japan’s rapid industrialization—the engine of its economic miracle—was a kind of deliverance from the fiery judgment of Hiroshima and Nagasaki. No other country experienced the specific horror of nuclear bombardment, of course, but the palliative construct of the economic miracle was frequently invoked elsewhere after profound sociopolitical trauma. West Germany’s economic miracle “transformed society and undermined Social Democratic calls for the socialization and planning of the economy,” according to Mark E. Spicka.5 South Korea, destitute after its war with the North, leapfrogged Portugal, Hungary, Mexico, Argentina, and Brazil’s GDP by the 1980s, a product of the economic “miracle on the River Han.”6 The creation of the state of Israel, which has enjoyed astronomical economic growth, stemmed to a great degree from the devastation of the Holocaust. As Dan Senor and Saul Singer argued in Start-Up Nation, “other small and threatened countries, such as South Korea, Singapore, and Taiwan, can also boast growth records that are as impressive as Israel. But none of them have produced an entrepreneurial culture—not to mention an array of start-ups—that compares with Israel’s.”7 One need not agree with the authors’ premise to note the common celebration of rapid economic growth in the wake of great tragedy.8Cold War Latin America boasted similar feats, with so-called economic miracles serving to justify dictatorship. Nowhere was this dynamic more evident than in Brazil and Chile. Indeed, even as he admired the Japanese from afar, Beting’s own nation was enjoying astronomical growth rates less than a decade into a military regime that would last twenty-one years. In 1973, the elected government of nearby Chile was also toppled by a coup that laid the groundwork for a drastic policy transformation that Milton Friedman would celebrate as “an economic miracle” and “an even more amazing political miracle.”9 Despite such happy talk, however, all was not as it seemed behind the facade of economic growth and development in these societies.This essay brings to the fore the ideological connotations implied but often missed in the idea of economic “miracles.” While increases in employment, foreign investment, and industrialization are tangible facts reflected in data and individual experiences, bundling them together and branding the result a miracle is neither innocuous nor incidental. Emphasizing economic achievements enabled the Brazilian and Chilean dictatorships, as well as friendly foreign governments and international observers, to downplay or obscure the negative aspects of their regimes. To say a particular economic model has produced a miracle is to say essentially that it is working. More than a mere descriptor of hard economic data, an “economic miracle” is an argument for the status quo. In the cases I discuss, the status quo was brutal military rule.Along with their cadres of icy technocrats, the military dictators of Brazil and Chile insisted that the kind of growth they presided over was only possible because the armed forces had entered the political arena. In a way, there is something to this. As Jennifer Hermann notes of Brazil, it is unimaginable that the economic reforms that purportedly made the miracle possible—a mix of austerity and a sharp turn toward encouraging foreign investment—would have passed a democratic legislature prior to the 1964 coup.10 Chile’s socialist president, Salvador Allende, likewise would never have embraced the policy recipe of Friedman’s Chicago Boys. After the coup in Chile, as Juan Gabriel Valdés put it, “one extreme of radical ideology was immediately followed by its very opposite.”11But the longer history of Brazilian development in the twentieth century calls into question both the notion that the 1964 coup was an economic imperative and that economic growth under military rule was the result of ingenious policymaking.12 Inflation had indeed soared under President Juscelino Kubitschek (1956–61) in a way it did not under the generals, from 19 percent in 1956 to over 30 percent in 1960, but the lower post-1964 inflation rate owed much to the fact that the dictatorship deliberately cooled the economy on the backs of the working class.13 The regime was primarily taken with elitist concerns, as former president Fernando Henrique Cardoso later noted, pointing out that the vast majority of Brazilians saw their real incomes decline during the dictatorship.14 Whereas Kubitschek had to weigh difficult economic decisions against popular sentiment, the generals simply clamped down on unions and political organizing. They had no popular mandate to concern themselves with.In the Chilean case, Heidi Tinsman has shown that the agricultural boom that occurred under Pinochet had roots in the pre-1973 period. “The economic miracle for which Chile’s military regime would become famous in the 1980s,” she writes, “was a product long in the making.”15 Felipe González and Mounu Prem have argued, for their part, that there is a lack of conclusive evidence as to the centrality of the reforms enacted under General Augusto Pinochet for the nominal economic successes of the 1980s.16 Establishing certainty on the matter one way or another lies beyond the purview of this essay, but the problem of attribution must always be considered when assessing something as nebulous and fantastical as a miracle. In short, we should be wary of those who would claim economic miracle-making entirely for themselves.In the case of Brazil and Chile, to believe uncritically in miracles is to believe that authoritarian regimes can transcend the circumstances of their creation. As Sebastian Edwards notes, the Chilean miracle was marred by “an original sin: it was put in place by a dictatorship, a regime that violated human rights and systematically persecuted, imprisoned, tortured, and assassinated its opponents.”17 The same was true in Brazil, where the highest rates of economic growth coincided with the harshest repression under President Emílio Garrastazu Médici (1969–74), a period referred to as the anos de chumbo, or years of lead. At best, accelerated growth in Brazil and Chile softened the blow of authoritarianism. The implicit conclusion from celebrations of these regimes’ economic records, however, is that violent dictatorships can become benevolent or transformative forces for social good. To responsibly assess the Brazilian and Chilean miracles, as this essay aims to do, is to emphasize the violent context in which they emerged—to insist on the prevalence of that grim caveat, “on the other hand . . .”Post–World War II Latin America was characterized by several simultaneous transitions away from dictatorship. Structural challenges, however, including a dependency on primary commodity exports and a grossly unequal distribution of wealth, threatened democratic consolidation across the region. Enduring economic disparities produced social unrest, political instability, and military interventions as the global ideological competition of the Cold War escalated. Those involved in the coups and the military governments that followed claimed that their dramatic interventions were necessary to forestall calamity. Aided by “engineers of chaos,” Goulart had deliberately sought to ravage the economy so as to introduce “the Trojan horse of political and social subversion,” according to Roberto Campos, the Brazilian dictatorship’s first minister of planning and economic coordination.18 The leaders of the Chilean coup decried “the extremely grave economic, social and moral crisis that is destroying the country” and claimed to be “fighting for the liberation of the country from the Marxist yoke.”19 The unconstitutional seizure of power signaled a profound shift in the social, political, and economic life of both nations. A change was coming—for the better, supporters of these interventions insisted.Brazil’s postcoup economic policy focused on curbing inflation, which had been rising since the mid-1950s. Under Goulart, economic growth plummeted from 8.6 percent in 1961 to 0.6 percent in 1963. Brazil’s industrial output contracted during his last full year in office, an alarming development that had not happened since the start of World War II.20 The new military government froze wages to reduce consumer spending power, devalued the Brazilian cruzeiro to increase export competitiveness, and restricted the flow of credit. For the next few years, these measures had a chilling effect on domestic consumption and limited access to capital for businesses. A potent early criticism of the dictatorship focused on its “denationalization” of the country’s economy, that is, the relative weakening of domestic businesses against the increasing presence of foreign corporations.21By the end of the decade, however, having stabilized the economy, the regime embarked on an ambitious state-led development plan. Strategic industries like steel and automobiles received significant subsidies to boost production and domestic competitiveness. Massive investments were poured into infrastructure projects like roads, dams, and power plants to create the foundation for renewed industrial growth. Perhaps most emblematic were the regime’s efforts in the Amazon, the human toll of which was recounted by the anthropologist Shelton H. Davis in his 1977 monograph Victims of the Miracle: Development and the Indians of Brazil. Initiatives such as the Trans-Amazonian Highway and large-scale agribusiness ventures led to extensive deforestation, displacement of Indigenous communities, and environmental degradation.22 On the tenth anniversary of the 1964 coup, Army Minister Vicente de Paulo Dale Coutinho stressed the regime’s commitment to national sovereignty and economic development. In embracing what he called the “Amazonian challenge”—making the vast rainforest available to commercial interests—the military demonstrated its unmatched aptitude for meeting challenges that previous governments had failed to address.23 Additionally, the government implemented protectionist trade policies, shielding domestic industries from foreign competition in an attempt to foster domestic production and push back against the charge of denationalization. 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