Earlier this month, Brazilians elected left-of-center Luiz Inacio Lula da Silva by a razor-thin margin over the combative Jair Bolsonaro in a heated campaign for the nation’s presidency. That the electorate opted by one point for a former president implicated in the country’s most notorious money laundering scheme — then absolved by higher courts — follows a pattern in Latin America’s history that has favored state-centered economies over free market alternatives and decentralized governments.
During the colonial period, the late Stanford historian Richard Morse taught, the Catholic-based monarchs of Spain and Portugal played a paternalistic role, theoretically watching out for the well-being of all their subjects, Indigenous peoples included.
While this did not always work out in principle, it set a precedent for the long shadow of independence.
Latin American nations declared their independence between 1810 and 1824. Brazil broke away from Portugal in 1821. While federalist principles failed to take root in the Spanish-speaking countries, Brazil chose a more centralized model.
Strong men on horseback, known as caudillos, filled the void of representative governments and free market economies in places like Argentina and Mexico. During the same period, Brazil opted for a unique model headed by an emperor, first a father, Pedro I, then his son, Pedro II, who held the country together until 1889.
It was only during the period from 1850 to 1900 that both Brazil and the Spanish-speaking republics opted for economies driven by foreign investment. Railways crisscrossed the continent. Beef and leather flowed from Argentina to Britain. Coffee and tropical fruits from Guatemala to the United States.
It would only be in the late 19th century that American excesses in expanding south, to places like Cuba during the Spanish-American War, invited a reaction redolent with nationalism that set the stage for a more inward-facing 20th century.
Beginning with the Mexican Revolution, from 1910 to 1920, many Latin American countries attempted to regulate foreign influences. The Mexican Constitution of 1917, for example, returned the mineral rights of companies like Standard Oil and British Petroleum to the state. Other nations and political parties, including middle and working class coalitions in Peru, for example, called for closer oversight of investments from the United States and Europe.
Under the Perons, Argentina adopted lavish state-directed benefits programs that elevated the quality of life of workers but impoverished the state. While governments directed industrial production, generous subsidies kept struggling families afloat in places like Mexico.
During the second half of the 20th century, Fidel Castro launched a nationalist revolution dressed in communist robes which vanquished American companies — $4 billion of expropriated property remain tied up in American courts that Cuba must account for prior to reconciliation with the United States. Cubans looked to the state for employment and most consumer goods.
It would only be for a short period of time, from 1990 to 2001, that Latin American nations adopted free-market principles, including the privatization of state-owned companies. Free trade agreements encouraged export-led manufacturing in the hopes of creating Asian-like development. Some countries, including Argentina, Ecuador and Brazil pegged the value of their currency to the dollar.
Yet, when Argentina’s economy crashed in December 2001 — the peso dropping from parity with the dollar to a value of 33 cents on the dollar — Latin American governments resorted to more nationalistic policies, a trend which has held steady during the balance of the 21st century.
When “Lula” was elected to the first of two terms in 2003, Brazil boasted strong sales of oil and soybeans, particularly to China, which generated surpluses that could be transferred to the nation’s vast population through subsidies and favorable financing for consumer goods. Brazilians responded by reelecting Lula even as the economy sputtered into the 2010s.
What would serve Latin America best as Lula assumes a third term is a balance between innovative industrialization, supported by free market principles, paired with tax revenues that could be funneled to state-directed support for citizens struggling to stay ahead of poverty — capitalism with a heart.
The traditions of a government that looks out for the entire welfare of its population need not conflict with the pursuit of productivity throughout the hemisphere.
The alternative in Brazil during the next four years will only polarize the nation further through increased taxes — in lieu of productivity — as Lula’s promise to uplift the millions of families that he helped pull out of poverty less than a decade ago.
Evan Ward is associate professor of history at Brigham Young University, where he teaches courses on world history, including modern Latin America.