Vol. 11 No. 3 (1991): Jul-Sep / 1991

Vol. 11 No. 3 (1991)

Jul-Sep / 1991
Published July 1, 1991


A critique of the Washington Consensus
Pedro S. Malan
Brazilian Journal of Political Economy

This was the intervention of the author at the closing Panel of a Conference in
Honor of Albert Hirschman on Development Strategies for Latin America. It draws attention
to some shortcomings of the so-called “Washington Consensus”, John Williamson’s apt
expression to describe the view that better policies lead to better results, worse policies to
worse results. This is true but trite, trivial and tautological. The author suggests that there
are three types of policies to be addressed: the first is related to the quest for macroeconomic
stability; the second to much-needed microeconomic reforms; the third is the missing link
in the Washington Consensus and has to do with the resumption of growth and investment
with technological change in an increasingly competitive world economy. This requires, in
addition to macro- stability and micro-reforms, some visions of the future and a much more
effective pattern of interactions between the private sector and a modernized and active
public sector, given the interdependence of investment decisions in the presence of economywide

JEL Classification: B22; O11; O43.

Labour Market and distributive lop
Edward J. Amadeo, José Márcio Camargo
Brazilian Journal of Political Economy

This paper examines the effects of the segmentation of the labour and goods
markets over the dispersion of relative prices and wages in the Brazilian economy. The
theoretical argument is based in the behaviour of firms in the oligopolist and competitive
sectors of the economy, on one hand, and the behaviour of organized and non-organized
labour, on the other. We suggest that the negotiations between oligopolist firms and organized
labour can be seen as a positive-sum game; whereas a zero-sum game characterizes the
distribution of income in the economy as a whole. Hence, we conclude that there has been
a redistribution of income in favour of profits and wages of those agents operating in the
oligopolist sectors in detriment of the other agents in the economy.

JEL Classification: J31.

Income distribution, effective demand and accumulation
Fernando J. Cardim de Carvalho
Brazilian Journal of Political Economy

The paper presents a survey of the main theoretical schools approaching the
determination of income distribution profiles. This question has been the core of economic
theory since its birth, with Adam Smith. Classical Political Economy had its focus on the
relations between functional income distribution and the development process, proposing
that growth could be promoted by an increase in the profit share of national income.
Neoclassical economics maintained the focus on functional distribution, relating it, however,
to a notion of relative scarcity of factors of production. Keynes’s General Theory changed
the emphasis to personal distribution that would be related to the formation of the various
elements of aggregate demand. Post Keynesian studies tried to relate Keynes’s views to
classical insights on income distribution. The paper ends with a brief examination of some
studies on Brazilian income distribution profiles.

JEL Classification: B12; B22; E25.

Coffee, cocoa and economic growth in Brazil
Maria J. Willumsen, Amitava Krishna Dutt
Brazilian Journal of Political Economy

This paper analyzes the impacts of increases in prices of two primary products
– coffee and cocoa – on the growth of the national and regional economies. It tries to
understand the factors that have determined salutary effects in the coffee region and
negligible effects on the cocoa region. The results suggest that only a partial answer can be
found in the nature of these products, as proposed by the “staples” approach. The largest
effects seem to be connected with some social and macroeconomic characteristics prevalent
in these economies during the “boom” period.

JEL Classification: O47; Q11.

Orthodox stabilization programmes in Brazil 1964/68 and 1980/84: reflections on their perverse effects
Leonel Mazzali
Brazilian Journal of Political Economy

The perverse effects associated to orthodox stabilization programmes, specially persist-ent inflation accompanied by a prolonged period of recession with unemployment, attract the attention on the evaluation of consistency between the orthodox approach and the economic situation which characterize the crisis. Then, the comparative study of two economic stabiliza-tion policies in Brazil, in the sixties and eighties — PAEG (1964-1968) and Stabilization Pro-gram (1980-1984) — gives opportunity to develop an analysis of the incoherencies in orthodox view about the roots of inflation and balance of payments disiquilibria.

JEL Classification: E31.

Inflation, customers and relative prices
Gustavo H. B. Franco, Carlos Parcias Jr.
Brazilian Journal of Political Economy

The paper discusses the factors governing relative price changes often observed in sudden desinflations. It examines inflation induced changes in consumer behavior in markets with im-perfect information and, along similar lines, discusses ways through which inflation affects firms pricing decisions, focusing more specifically on changes in demand elasticity and on cash flow uncertainty.

JEL Classification: E31.


The misleading operating deficit methodology
Álvaro Antônio Zini Jr.
Brazilian Journal of Political Economy

The concept of operational deficit is taken by many economists as the relevant
concept of public deficit. It is argued in this paper that the concept is flawed and that its
current method- ology of estimation is inadequate. In 1990, for instance, the Government
deducted an inflation of 1355% from the nominal deficit (PSBN), but only accounted an
expense of 837% as monetary correction in the expenditure side, to arrive at an estimate of
a 1,2% operational “surplus” over GDP. It is argued that such number is illusory and that a
better alternative is rouse an ex-ante concept of deficit for policy decisions.

JEL Classification: H62; H60.

Notes and Comments

Exchange rate, dollarization and competitiveness
Pierre Salama
Brazilian Journal of Political Economy

Differently from previous situations, inflation in Brazil follows a very difficult
equilibrium: it remains very high, but do not explode in a hyperinflation. This process leads
to faint output and persistent inflation-based distortions. The author suggests a Koreaninspired
solution, where the State has an active role in promoting industries and exports.
An important instrument is the exchange rate.

JEL Classification: E31; L52; F31.

Economic and demographic concentration in Brazil: recent inversion of the historical pattern
George Martine, Clélio Campolina Diniz
Brazilian Journal of Political Economy

Brazil has enacted a series of policies to reallocate and spread the population
and productive resources to other areas of the country than the traditional coastline.
However, São Paulo continues to concentrate the largest contingent of population of Brazil
and to represent the biggest populational increase. This paper analyses the processes that
led to this condition and possible alternatives.

JEL Classification: R11; R12; R14.


Aníbal Pinto: a Latin American economist
José Serra
Brazilian Journal of Political Economy

Aníbal Pinto’s work is at the origin of the structuralist school and of criticism,
since the late 1940s, to the dominant paradigm in the academic world of developed countries.
The criticism was initially centered on the rejection of the idea that, after European
reconstruction ended, multilateral trade and the free convertibility of all currencies would
guarantee similar rates of prosperity among all the countries that make up this system,
poor and rich. A natural corollary of the rejection of this thesis was the strong idea of
industrialization, with its demands for selective protectionism; infrastructure development;
production, including state-owned, of basic inputs; programming and financing of large
investments. Such concerns marked the early years of ECLAC and the beginning of the
work of Aníbal Pinto, one of the most creative, fruitful and influential Latin American

JEL Classification: B31; B22.

Caio Prado Jr.
Pedro Cezar Dutra Fonseca
Brazilian Journal of Political Economy

Obituary of Caio Prado Jr.


JEL Classification: B31; B25; B32.