The Brazilian Federal Constitution speaks of a “free market” (Art. 170) and describes the state as a “normative and regulating agent of economic activity” (Art. 174). Unfortunately, reality is completely different. We have two worlds in Brazil: the first is the naïve utopia of the legislator; the other is the crude practice of political gangsters. Life as it is differs substantially from life as it should be.
As pointed out by Professor Douglass North, economic growth is directly linked to the quality of a nation’s institutions. Prosperous countries are buttressed by strong, serious and efficient institutions; poor countries are infected by weak, dishonest and exploitative ones.
The fact is that we do not have capitalism in Brazil. Our free market is state-directed, while our “free competition” favors powerful friends of the government. Some may say that we have state capitalism, but that is not true, because in that type of economic system, a functioning government intervenes in market forces. Our model is “collusion capitalism,” marked by unholy alliances between companies and the state. The goal is not national development, but increasing the personal wealth of participants in corrupt schemes.
Therefore, corruption is a way of life in Brazil, benefiting a few to the detriment of many. We will only have sustainable economic growth when we catch the gangs extracting for private gain, and ensure the effective parity of parties in the marketplace. The problem is that, while there is impunity, corrupt systems are stable.
To disrupt the criminal status quo, it is necessary to capture some heads of the corrupt system. The strategy of “frying a few big fishes” would send a message to the others, and would be an opportunity for law enforcement to put institutions to some positive use. After the capture of some of those responsible, it would become possible to break the silence around organized economic crime through the use of plea bargaining agreements.
However, parallel to fighting in the courts, some deep changes in the structure of the political-economic system are essential. When corruption becomes a dominant pattern in corporate behavior, illegality and bribery become the rule. This means we are facing profound institutional problems. Many powerful politicians and economic agents are addicted to easy money, making corruption seem natural and irreversible.
To rescue the proper functioning of the economic system, it is essential to establish effective and tough action against monopolies, oligopolies and business cartels. The growth of hegemonic economic groups undermines free competition, equality of opportunity, and a healthy entrepreneurial environment. The more closed an economy is, the greater the chances of the market being turned into a fiefdom of the powerful.
We are beginning a difficult transition process in Brazil. The process will not be without intrigue, threats, slander and lies. As good citizens, we have to believe in and support the transformation. Corruption will always be a human hazard, but it is possible to build a more dignified country. Democracy requires courage and attitude to be something more than the mere promise of liberty, justice and equality.