1The main purpose of this chapter is to attempt to give a brief review or outline of the works and ideas of Celso Furtado in relation to development. In order to limit the work to a reasonable length, I have sought to emphasize only those moments I believe were crucial in his thought process, in the hope that Western-centric readers will appreciate the importance of his ideas related to the “development” of Latin America during the 1960s and 1970s. His exile after 1964 limited much the diffusion of his ideas, although his publications did not recede, much of which were the basis for his classes in France and conferences, until his return to Brazil in 1984. Aspects of his work have today become central to rethink the discipline and economic policies appropriate for the future of the region.

2Previously we have already drawn an outline sketch of the conditions that made the rise of developmental economics, touching on some of the political, economic, and cultural world historical context of the post World War II period which established the institutional and theoretical conditions in Latin America facilitating the rise of a “southern” perspective. Prebisch’s leadership of the process was crucial, although known worldwide for his “Central Bank” counsel; in the region the apparent default by the USA, of many of its promises in Latin America in the 1940s, generated the fervor for a more “nationalist” perspective on development. The International Conference in 1947 in Rio de Janeiro in favor of maintaining the Peace and Security for the continent, takes up the Interamerican concords realized in Chapultepec, Mexico City, in 1945, on problems of war and peace.

3Therefore we now follow by examining some pertinent aspects of the economic discipline that were confronted head-on and transformed by this Brazilian economist (“The Economic Science: the Glorious Days and its Deficits”), continued with a description of his first period as a theoretician of development (“The Armed Crusader: 1949-1964”), that is, as a “reform monger” according to O. A. Hirschman (1963), or “a fanatic” (G. Harbeler).1 This is followed by a description of his period in exile (“Rethinking Capitalism and the Industrialization Process, 1964-1975”), to concluding (“The Prophet Returns: 1975-2004”) with a discussion of some of his work produced upon his return to Brazil in the 1980s until his decease in 2004.

4The importance of his work has been overshadowed by the rise of neoliberalism’s dominance, whose history and deconstruction of Latin American Structuralism revolves around its portrait as an “anti-market” discourse. And yet it is a suitable occasion to reiterate that the “creation” of markets was an explicit aspect of the main objectives in the transformation of the social and technical division through the policies promoted (land and fiscal reforms). Although “governmental” guidelines or interventions by way of programmed sectoral reconstructions of the economy were part and parcel of the strategy to boost certain aspects of “development” and “growth,” today these characteristics of the discourse are lost to younger generations all over the world. Nevertheless, the “market,” left to its own devices could not produce the momentum and the force necessary for the transformation of societies into more equal and just entities.

5Although Furtado’s name might be a misnomer to many, the economic vision nearest to his conception of “structuralism” could be described as “old institutionalism” (Veblen, Mitchell, Commons, Ayres, amongst others). If their respective ideas could be welded together today, they would not simply be a counter-position to revive the “State” vis-à-vis the “Market” dichotomy, but rather they would offer a means to argue that the contrasting “opposition” is itself unfounded. Furtado’s structuralism shares with the classical institutionalists the idea that the “market” is a specific set of asymmetric social relationships, which have specific conditions of existence pertaining to the agents’ power mechanisms in question (“embeddedness” was Polanyi’s term), and which need to be understood in order to construct the pertinent economic strategies to disentangle and liberate their action for a “better,” equal and just society. Although it is not the present theme of the chapter, I have argued (Mallorquin 2006) for their mutual articulation and similitude, although Furtado himself disowns any parallel between his structuralism and institutionalism.2

Economic Science: Its Glory Days and its Shortcomings

6By the second half of the 1940s, the preeminence of Keynes’s ideas on the possibility of resolving the “cyclical” nature of capitalism through some kind of planning or demand management cannot be put into doubt; his name and his ideas were synonymous with a “revolution” in economic science within academic institutions all over the world. The fruitful results of his ideas over time and space, not really expected by their progenitor, were soon to be discovered by many and especially those working within Latin America. With some degree of adaptation and transformation, the Keynesian categories could easily become a powerful tool to initiate a description and explanation of the economic history of Latin America. This task was soon undertaken by R. Prebisch, J. F. Noyola, V. Urquidi, R. Boti, A. Pinto, O. Sunkel, D. Seers, to name but a few.

7For some, the “Keynesian revolution” meant that the theoretical importance accorded to its ideas were part of a much broader mutation in economic science itself and accordingly, sooner or later they would be uprooted, in much the same way as they had once displaced some of the “neoclassical” postulates, which, unfortunately as we now clearly know, were not after all banished to the rubbish heap of history.

8The role of the “multiplier” and the “accelerator” were crucial to many of the calculations that would be undertaken to postulate specific rates of growth. The recommendations towards a full employment policy admitted that the economic complex could not be a self-regulatory entity. Fiscal policies and management of interest rates as well as budgetary deficits were part of a process aimed at maintaining a certain level of employment and income: demand-managed economies became the common name in post-World War II discourse. In Latin America, these aspects were examined within “structural reforms” of all sorts, fiscal, land, and reconstruction and integration of the societies in the region.

9But Western-centric “economic science” could not go further than reiterate its newfangled categories when thinking of the Periphery or the “backward countries.” There was a brutal silence, and absence of a specific theoretical discourse about countries that were plainly not “industrialized” (Arndt 1987, Heilbroiner 1964, Love 1996). The emergence of the notion of “underdeveloped economies,” following World War II, which singled out late-comers to the growing industrialization process or raw material producer countries, was the product of crucial theoretical and political battles fought by institutions like ECLAC to push forward the process of industrialization and social transformations. Simultaneously, in the Latin American region, long existent and new universities would recognize “economics” as an independent field in its curriculum, for example, the National Autonomous University of Mexico founded economics as a separate discipline in 1946.

10Prebisch’s ideas, and later those of Furtado, opened up a vast uncharted theoretical landscape, which henceforth would be mapped by means of new categories which would incorporate “programing” (ECLAC’s functionaries eluded the use of the term “planning”) as one of the means to induce a calibrated process of development. Since the thirties, Prebisch had been experimenting, with great difficulty and not much success, with various explanations to account for Argentina’s topsy-turvy economic development, including those that took their starting point from conventional economic categories: the cyclical notions of capitalism and the “Gold Standard,” were parameters that left much to be desired, and could only be fitted to Argentina’s experience through an unquenchable violation of the facts (Prebisch 1944b, 1944c, 1949a).3

11As seen above, by 1948 Prebisch had advanced a theoretical perspective that would culminate in a specific discourse about the so-called “primary goods producer” countries or the Periphery of capitalism. In other words, he thought that what was needed to address the “Periphery’s” problems, could not be deduced from Keynesian and/or neoclassical models of development. It was therefore paramount to differentiate the raw material producing countries (the Periphery) vis-à-vis the “Center” or industrialized nations. He was arguing against the plainly “false” claims of “universality” of the Western-centric economic discourse hegemonic at that time, which in the last instance assumed that the countries of the Periphery would undergo similar structural transformations during their development process as those that the industrialized countries had undergone in the past, adjusting themselves to the world economic forces; a concept of history which L. Althusser (1969), in a polite and paradoxical manner has termed as “future anterior.”

12Under this scheme of things, the “backward economies” had to adapt themselves to an international trading system that blessed its relative abundance of “factors of production.” There arose a version of a worldwide complex of trade, which reinforced the hitherto international division of labor: the Periphery had to specialize in the production of raw and primary products, and the Center concentrate on the production of manufactured products.

13These countries were supposed to utilize those “factors of production” which were in relative abundance, and thus cheaper, to produce specific goods. Accordingly, there was a “comparative advantage” (no doubt in static terms) that favored some countries to concentrate on the production of certain products that required diverse intensities of capital and/or labor. The surplus production would form part of the trade pattern that would maximize the overall growth and earnings of respective economies.

14Above we saw that Prebisch (and H. Singer) showed that those countries that actually followed this path, and accordingly adjusted their economies to the cyclical growth process of capitalism, found themselves, in the long run, in a worsening spiral situation. If, as he argued, the diffusion of the fruits of technological progress should have favored the Periphery, given its lower productive or technological capacity/intensity, so it should have manifested itself in lower price levels for manufactured goods imported. But the international price index revealed otherwise; this by itself did not prove, nor explain what came to be known as the Prebisch/Singer thesis of the “deterioration in terms of trade” of the Periphery vis-à-vis the industrialized Centers. What was claimed was that after the repetitive cycle, the Periphery, besides not being able to keep to itself its own “fruits of technological progress,” also lost them through the downward pressure that was exerted on the prices of its goods.

15The Periphery’s deterioration of its terms of trade vis-à-vis the industrial nations, was due to the existence of an asymmetric power relationship between the parties in question, or as is commonly typified in mainstream economics terms a disparity of the “elasticity price demand” for their respective products. Given the Center’s labor force mode of organization, they managed to preserve their overall wage-salaries conditions, sustaining heretofore price and cost levels vis-à-vis the Periphery, despite the downswing in the cyclical process. It is true, as Prebisch argued that the gains (prices) in primary products during the upswing rose at a much faster pace than their counterparts at the Center’s, but it is also historically correct that during the downswing they declined and lost much more than they had gained previously.

16To preserve the hitherto level of export earnings the Periphery had to increase the quantum of its exports, intensifying its productive capacity, which in turn increased its demand for imported goods (semi-manufactured and manufactured), constraining the diversification of its economy, in other words the technical and social geographical division of labor. Thus, every cycle saw the imposition of a descent of its income level. The deterioration of the Periphery’s terms of trade with all the subsequent negative consequences on its external balance account and the search for the so-called “equilibrium,” generated a lower rate of investment, while simultaneously considering formulas to induce a higher level of savings, which was generally undertaken by cutting health and education expenses. Which in turn reduced the capacity to receive foreign credits and consequently overseas capital. This had to be resolved by attracting foreign capital through an internal deflationary process, all of which stalled the growth of the economy.

17The growth of income in the Center was not reflected in an equally proportionate increase in the demand for products or goods from the Periphery; on the contrary, a whole series of substitutes and demand schedules appeared for other, and more elaborated types of goods, which for the Periphery meant a reduction in demand for its goods. The Periphery’s growth was therefore inhibited by internal and external tendencies, “disequilibrium,” given its lower capacity for imports, which explains its stop-go characteristics.

18Also, the manifestations of the Periphery’s erratic growth process throughout the twentieth century, forms part of its heterogenous characteristics product in turn of the asymmetric power between and among the agents, regions, and countries. An aspect central to Furtado’s theorization was the notion of heterogeneity and “underdevelopment” related to differing productive organizations, not “stages” to be superseded, but rather requiring reconstruction under alternative social relations, and geographical integration, hence the importance of regional “common market” arrangements. Besides creating a less “heterogenous” configuration base, the substitution of imports with local production (industrialization), would also make it easier to control the economy during cyclical downturns.

19During strong nationalist social forces in the 1940s, the so-called “ideology of developmentalism” reigned supreme. The political forces headed by Getulio Vargas and a large number of institutions like the Superior Institute of Brazilian Studies (ISEB) inscribed the industrialization process within the plans that they had a chance to come up with, culminating with Kubitschek’s (“Targets Plan”) economic plans.

20After the war, the National Bank of Economic Development (BNDE) was founded and soon made agreements with ECLAC through the work of Furtado founding many development projects. The Joint American and Brazilian Commission, which was formed to enhance the industrialization process, had Furtado as its Director. Brazil became, in the first half of the fifties, a theoretical paradise for discussing and experimenting on the theme of “development.” Most of the leading exponents, and critics of a full-speed-ahead-towards-industrialization policy visited the country during that time and discussed the topic. For example, G. Myrdal and R. Nurkse with whom Furtado was to establish a specific debate on the issue of the size or otherwise of the market as a potential limit to the capitalization and development process. However, last but not least, the “structuralists’” terror: J. Viner and L. Robbins also visited the region to counteract the transformation in process, the latter had recently finished polishing the Mont Pelerin Society (Mirowski 2009), the former an active member of the society in question. One should not forget also that it was Vargas’s ultimate push that finally made it possible to confirm the existence of ECLAC as a member of the United Nations, contrary to the wishes of the United States, after a trial period of three years (Santa Cruz 1984, Magariños 1991, Furtado 1985).

The Armed Crusader: 1949-1964

21Two aspects dominated and predetermined Furtado’s theoretical and practical interests during these years. On the one hand, the examination of the evolution and transformation of the Brazilian “economy” from its inception as a colonial entity, with particular attention given to the post-slavery period of 1889; and on the other, a description and reconstruction of the interpretation of the rise and history of economic ideas as the royal road to knowledge for the Periphery and its development process.4 He clearly wanted to follow the critique of economic theory which Prebisch had initiated to its radical roots, but considered it too general, and sought a more specific theoretical vocabulary rejecting most of Western-centric discourses.

22Ever since taking up a post at ECLAC in 1948, Furtado had been working on a whole series of projects that kept him in close contact with Brazil and the growth of the Latin American economies. Perhaps for the very first time in Latin America, at the organization mentioned above, there arose a profound consciousness of its possibility to contribute, theoretically and practically, to the solution and advancement of economic science but with a view more geared towards Latin America. New data and statistical series were elaborated, with specific objectives in mind; thus, the practicality of updating methods for measuring (deteriorating) terms of trade, and external “purchasing power” as Furtado coined it in a ECLAC document (1953)5 under his direction.

23Furtado’s first published book, The Brazilian Economy: A Contribution to the Analysis of its Development (1954)6 as mentioned previously, had two quite distinct problematics. On the one hand, it was comprised of a historical description of Brazil’s “economy” from its colonization up until the decade of the 1950s, and on the other, one of the first documented histories of economic thought focused on the problems of the so-called “backward” economies,7 demonstrating that these concepts were negative at best, and worthless to think the lineages of the specificities of an “underdeveloped economy.”

24Since joining the organization Furtado had been taken very seriously Prebisch’s thesis of the false universality of the Western-centric economics orthodoxy. His first book, The Brazilian Economy (1954), which was dedicated to Prebisch, was simultaneously written while undertaking his organizational tasks, directing An Introduction to the Technique of Programming (1953) and revised in 1955. Between 1950 and 1954 he wrote a series of articles that were to become the book mentioned above (1954). Some of the articles were published in Western-centric international journals.8

25The book (The Brazilian Economy) can be divided in two parts: a historical description of Brazil’s recent economic evolution and transformation, and an engaging critique with classical political and its more modern theorists: A. Hansen, J. Schumpeter, J.M. Keynes, whom with the exception of Schumpeter all misunderstood or did not engage theoretically on the problems which could be thought within the “underdevelopment” ensemble.

26The second part of the book is indeed paradoxical given that its author, who was to be in the years to come the constructor of the “underdevelopment” problematic nearly single handedly, exhibited deep theoretical tensions. On the one hand its contradictory and teleological characteristics and on the other hand, unwittingly recognizing in the Western-centric perspective a potentiality to supersede its limitations.

27The problematic and questions with which he addressed to economic thought have yet to be created which was to be a product of his own doing: mainstream orthodoxy examined “backward” countries in terms of its own categories, with all the linear evolution suppositions that it entailed. And yet one of Furtado’s starting bases to construct the theoretical space of underdevelopment is promoted by the conclusions of a Western-centric economic reunion in Chicago University in 1951 (Hoselitz 1953), where it was decided that the issue of “development,” “evolution,” and “change” in underdeveloped countries was not part of economics properly. Additionally, the theoretical strategy, through the examination of Myrdal’s (1945), The Political Element in the Development of Economic Theory, and Edwin Cannan’s (1942), History of Theories and Production… argued that economic thought has until then been a fully-fledged comedy of errors.9

28But in ECLAC, Furtado’s book did not fare well, especially with Prebisch, since his description of economic growth of Brazil in the forties and fifties was argued showing that there was no deterioration of the terms of trade and that the high rate of capitalization and industrialization process was realized under a very positive socializing cost effects that fell on coffee exporters and importers of consumer goods: the then existent selective foreign exchange controls in force favored the introduction of capital goods imports. The narrative questioned the idea that the recent growth of Brazil in the 1945-1954 years was a product of an “inflationary” process unless one forgets the simultaneous parallel product growth and expansion during the period.

29The concept of an underdeveloped economy as a distinct entity with its own logic and structure was already being processed conceptually by Furtado, which culminated into a fully-fledged discourse during the years of 1958-1962, displacing the teleological and evolutionary notions implicit and explicit in conventional economic discourse, Keynesian included. To start with, the notion of an “underdeveloped economy” of the “economic formation” starts dislodging the hitherto category of a “colonial economy” dominant in much of the text (Furtado 1954). By 1958, Furtado was convinced, although not yet completely theoretically armed, that the Latin American economies were specific historical entities that could not be explained with the traditional vocabulary of mainstream economics.

30Paradoxically, Prebisch’s brilliant foresight of the route Furtado’s ideas had taken in The Brazilian Economy… (1954), compelled him to reprimand the work. The confrontation (Mallorquin 1995) made Furtado think about leaving ECLAC. We could even speculate that to keep him away from the center of attention at ECLAC, he was regularly commissioned to participate in various economic reports and commissions, starting in the Brazilian and United States Commission and later, through his sudden trips to prepare reports in Mexico (1956), Venezuela (1957), both of which were not formally published by ECLAC, and known only internally to its functionaries and a few governmental representatives. He did finally leave ECLAC in 1957 to return to Brazil in 1958, after a ten-month visiting period of research in Cambridge, as an invitation sponsored by N. Kaldor.

31After 1954, Furtado’s cyclical notions of capitalism started disappearing; theoretically, Furtado started thinking more in “structural” terms, “obstacles” or “structural transformations”; concepts that could think productive agents embedded in specific social relations and historical contexts, which meant that the “rational” maximizing entities espoused in the official and mainstream economic discourse were insufficient.

32It followed that a theoretical reconstruction was in order, and accordingly, “underdevelopment” could not and should not be thought of as a historical “stage” to be overcome, but rather as the consequence and outcome of the existence of a specific set of power asymmetries between and among agents, hence the social and geographical heterogeneity which generated the many “imbalances” whose effects were once thought of as cyclical phenomena.

33Thus, a specific body of conceptual tools had to be constructed and that was precisely what occupied Furtado between 1958 and 1962. This process and its evolution did not appear in “one fell swoop,” as it were. In fact, it was achieved painfully during a period when he was fighting crucial political battles to transform, first the Northeast, as its first Superintendent (1959c),10 and secondly, as the Minister for Planning (1962b).11

34As I said, by 1957 Furtado had left ECLAC and spent a short period at Cambridge University, during which he became conscious of the asymmetric power context of ideas and their command. It seems perfectly plausible that Furtado’s reflections on his life in 1985 relates to the theoretical and ethical relation of intellectuals and politics. We have mentioned that by 1954 having rejected most of the Western-centric economic discourses as incompetent to theorize “underdevelopment”, the then ongoing “theoretical festival” (Furtado 1985, 2004) occasioned a reevaluation of his standing within “economics,” simultaneously exposing what he then considered an ethical imperative:

The formidable intellectual effort to which I was testimony in Cambridge [1957] was a new chapter in the permanent process of re-adaptation of economic science so that it can comply with the hoped-for functions of society. True: the nature of economic knowledge is scientific, but the domain which she explores is delimited by ideological motivations. The work of economics that strays from the domain of the political preoccupations delimited by its age is not good nor bad, its simply irrelevant. (Furtado 1985: 224)

35During those meetings, he approached James Mead, who having read an article in the making by Furtado (“The External Disequilibrium in the Underdeveloped Economies”)12 transmits to Furtado, in an apparently dismissive tone, that his perspective of the nature of the “external disequilibrium” in “underdeveloped economies”13 will be superseded and wither away once capital exports are resumed from developed towards underdeveloped countries. Furtado’s retrospective reflection to the “conversation” is significant: his interpretation presumes an undergoing theoretical process guided by a “counter-offensive” to “save the neoclassical theory of income.” As such there:

was no reason to contaminate economic science with institutional impurities. It did not escape me that the efforts undertaken by these men of exceptional qualifications was to take us back to the starting point: the recognition that development had taken place where technological progress and the circumstances permit, so that certain social agents canalize it for the formation of capital. (Furtado 1985: 225, my emphasis)

36In other words, Furtado’s irony and tautological triviality should not be lost to the reader:

The lesson was clear: the work of theorizing in the Social Sciences is to a certain extent a prolongation of politics. These reflections made me modify the vision I had of theoretical labor, inducing in me a change of my plans [1957] for the future in the sense of reevaluating political activity. (Furtado 1985: 226)

37Having returned to Brazil, he takes up in 1958 the first post of Director for the Northeast section at the National Bank of Economic Development (BNDE) and wrote the first project to develop the Northeast. Simultaneously during this period, he published The Economic Formation of Brazil (1959a),14 a text that incorporated most of the historical sections of the previously mentioned book The Brazilian Economy… (1954). The subsequent version of the book came with all the appropriate reformulations to give it a more distinctly “structural” flavor.

38Between the appearance of this book and the period of 1964 when he was forced to leave Brazil by the Military regime, Furtado fought on many a battlefield. He produced books and articles with distinct political and/ or academic flavor, and some of a controversial nature. The latter can be exemplified by the title of the book The Brazilian Pre-Revolution (1962),15 a compilation of a series of articles including the one used whose title created the explosive political uproar given his governmental responsibilities; a good example of the former can be seen in Development and Underdevelopment (1961), also a compilation of some of the material found in The Brazilian Economy… (1954), similarly appropriately reformulated, and also containing new material from 1958a and 1959b.

39By 1967, Furtado consciously established the existence of a Latin American perspective:

Economic structuralism (a school of thought that arose in the first half of the 1960s amongst Latin American economists) has as its principal objective to take into consideration the importance of the ‘non-economic parameters’ contained in macroeconomic models. Given that the behavior of these economic variables depends mostly on these parameters they have to be the object of meticulous study. (Furtado 1967: 81)

40Hence the importance of the emergence of economic plans, which for example implied “land reforms” (Furtado 1969, Chapter XXIII), so that the “structural picture” could be modified and the social agents in question be freed to take up better remunerated positions within the social and technical division of labor, which would improve the distribution of incomes and resources. It presumed then an “advancement in the knowledge of real structures, so that on many occasions it demanded the supersession of conventional economic analysis” (Furtado 1969: 297). Furtado insisted that his perspective had:

no direct relationship with the French structuralist school, whose main orientation was to give importance to the synchronic axis of social analysis and establish the ‘syntaxes’ of the disparities in social organizations. (Furtado 1967: 80)

41Traditional conventional economics cannot take account of nor explain the existence of “structural obstacles” or “heterogeneous agents.” Thus, there are no “homogeneous factors with the same technological time horizon” (Furtado 1969: 102). The problems of “underdevelopment” needs to incorporate notions of a non-unified labor market and the simultaneity of diverse (heterogenous) production functions, depending on the “surface of the economic structure in which the productive agent is inserted” (ibid: 102). The theoretical emphasis therefore tries to systematically destroy the traditional appearance of these problems within separate compartments, be they “economics” or “history.”

42In a sense, Furtado rebuilt into a theoretical concept a notion which for Perroux appeared to be an obstacle or ephemeral phenomena that needed to be reformed:

Structural inflation has adulterated the very notions of our science; that is to say, it has warped or broken the modern instruments which are necessary not only for the diagnosis, but also for the treatment or operations that are indispensable for its cure. (Perroux 1957: 263)

43From a Western-centric tradition, Furtado’s conclusions can be observed as theoretical transformations of Perroux’s idea (1950, 1950a) that specific and distinct economic units have differing “plans,” necessarily antagonistic to each other, and that so-called existence of an “equilibrium” or “relative peace” takes place when a certain unit or agent of production manages to establish a dominion around a respective economic plan-space and thus over the other economic agents (units of production).

44At this stage, his theoretical pondering took him explicitly beyond the confines of simple economics; his whole vision overflowed typical academic disciplinary boundaries; it took turns to wander along the paths of “sociology” and “politics” and even veered towards “anthropology.” To contemplate social changes or “structural obstacles” in underdeveloped countries, Furtado clearly disposed of traditional academic boundaries. In other words, he took on a daunting and/or heroic task: he attempted to “bridge” the divide between sociology and economics.

45It was also during these years that his political ideas became more radicalized; he discovered that he was not just another “technocratic” advice agent “free of values.” During this period, Furtado also resumed his rapprochement with Marx, which helped ennoble him further; he discussed and criticized him, discarded his theory of value, only to finally assimilate his notions of social classes and the State, exemplifying just how enigmatic and profound the turn of events in 1963-1964 must have been to Furtado.

Rethinking Capitalism and the Industrialization Process, 1964-1975

46Exiled by the military regime, Furtado left Brazil and passed through Chile on his way to the United States of America. In ECLAC, at the offices of the ILPES, Furtado discussed the material that would become part of his next book Underdevelopment and Stagnation in Latin America (1965). Among those assisting, were the names of those so often mentioned as the theorists of “dependency theory.”

47In the book, Furtado presented the first “structuralist” model of stagnation; but the book in its entirety presented all the conceptual characteristics that would later appear in the coming publications under the above-mentioned denomination. It clearly highlighted the social-political forces that are the basis of “internal” or “external” dislocations of an economy which constitute the conditions of existence of “underdevelopment,” so Furtado argued, notwithstanding the industrial base of some of the economies in question.

48The text was the culmination of what was to be Furtado’s specific “structuralism.” Although in this book Furtado exhibited a very pessimistic view of Latin American economies’ past and future rate of growth, industrialization, and social transformation, with hindsight we understood that the aim was to criticize and exhibit his disapproval of the social and economic asymmetries of the societies in the region, which was confused with an apparently inherent “stagnation” tendency, conceptualizing the exclusionary mechanism of social complexes like “capitalism”, which excludes the majority from the fruits of its technical progress. Furtado for the first time undertook an analysis, with a very nationalistic overtone, of the role of foreign capital in the conformation of the debt pattern and its productive role in Latin America. This was a theme that would never again become peripheral to his intellectual and political activities.

49In its inception, ECLAC always regarded foreign capital as merely a transitional phenomenon in Latin American economies, required only to undertake the initial process of capitalization and industrialization. Furtado felt betrayed by the United States’ promises and policies explicitly stated in the Alliance of Progress during his period at the forefront of development of the Northeast, which in part also explains his pessimistic tone after the Brazilian Military Coup.

50Furtado started with an examination of the “external” factors that he believed crippled Latin American economies (U.S. policy), and then moved on to describe the “internal” limits of the industrialization process within Latin America. In this aspect, he argued that once the easy phase of the industrialization process was over, in other words the phase aimed at substituting certain consumption goods previously imported through local production, which in real terms managed to incorporate a comprehensive number of the population within the growth of the economy, the next phase, involving the more capital intensive sectors, was bound to collapse. Furtado considered that the substitution of capital goods imports with local production required an overly intensive capital function, which in turn implied a higher level of savings requirements and income for imports. But this phase, exhibited certain negative aspects since it only absorbed a relatively low level of the labor force from the “backward” sectors of the economy. Aside from the fact that the capital-intensive function implied a much higher level of savings, which the upper classes did not and could not supply given their traditional historical behavior, the reduced market for its goods impeded the benefits of fully-fledged economies of scale.

51As a result, everything seemed to work towards lowering the productivity level of the economy (not just the capital-intensive sectors), thus ensuring the stagnation process of the Latin American economies.

52If Furtado was belied by the so-called “Brazilian miracle,” with rates of growth in the manufacturing sectors reaching up to 10 and 12 percent annually, in the late sixties and early seventies, he soon incorporated these new aspects into his future analyses of the Brazilian “model” of development. From Underdevelopment and Stagnation in Latin America onwards, Furtado would emphasize the historical aspects and role of the social classes leading the development process. Thus, Furtado was able to provide reasons to explain the (“unexpected”) growth pattern of the economy in question.

53In the Analysis of the Brazilian Model (1972), Furtado started by explaining the conformation of the Brazilian State with Vargas, and went on to illustrate that the growth pattern of the “Brazilian miracle,” owed its effort to the incommensurable concentration of wealth amongst a reduced minority, which was the only way to sustain the intensity of growth of the industrialization process based on the production of durable consumer goods.

54The economic policy was implemented by the “concentration” of income in fewer hands, not through its spread across wider strata of the population. State intervention in the economy, offering lower interest rates to businessmen and to potential consumers of the upper strata, enabled and induced a consumption pattern similar to that which existed in the industrial Centers, but without the corresponding level of savings. It was this policy that drove Brazil’s deficit on its external accounts sky-high during the 1980s which generated an un-payable foreign debt pile.

55The economy was composed of two unrelated markets,16 a massive consumer sector, with a very low productivity turn out, due in part to the State’s policy of maintaining salaries low; and simultaneously the market that produced durable goods for a modern lifestyle imitated from the industrial Centers. Furtado claimed that a very “specific demand” was in process, for a very particular structure of production, hence we had high levels of growth and at the same time, a growing majority of the population untouched by the fruits of the technological progress.

56Hence, it was easy for Furtado to leap towards a “cultural” theory of dependency, reiterating his sociological theorization of the agents of production explaining their behavior. Unfortunately, the “modernization” process was anything but a universal phenomenon. Its effect only reached and extended to a minority, which managed to impose a developmental pattern and values that were nevertheless unfelt by the rest of the population. It is obvious that Furtado here used the notion of “modernization” in a plainly sarcastic tone, since the so-called “structural functionalist” theory of modernization assumed it as an irreversible and universal force once it got under way. We cannot but mention the obvious similarities to today’s discussion on “globalization.”

57By now, the economist ingredients and the iron law of “stagnation,” proposed by Furtado in Underdevelopment and Stagnation… (1965), had withered away by his historical and sociological explanations. There was no automatic reproduction of any “tendency” in the economy, or hidden hand guiding it, but rather it was plain that it required a clear intervention by the State to give it some direction. And the social political forces which dominated the State in Brazil during the 1980s put aside the social reforms as well as some form of planification of the activities of its public enterprises.

58On the one hand, Furtado’s analysis of Multinational Corporations (MC) took on a greater significance in his studies of “capitalism” in general from 1964, but his perspective and intention to understand their dominance, and explain it under an all-encompassing logic swayed by US’s global policies, actually threatened, on the other hand, at the ver y least, to undermine the specific structuralist accounts that he’s been distinguished for. His insistence during the seventies, that a world capitalist superstructure was under construction, led by the US but on some occasions and in some versions in combination with the EEC (European Economic Community) (to control disturbances of capitalism, like the petroleum shocks in 1973, or the regulation on the use of certain raw materials), puts his analysis extremely close to those “structuralist functionalist” and teleological accounts of capitalism of which he so justifiably made fun of on other occasions.

59During the 1980s, this problem became more complex in his writings because his own descriptions of the USA’s commercial and industrial decline, vis-à-vis Japan and the EEC, dictated a new notion to explain the heterogeneous forces and politics of the MC and States in question. Thus, from a “multipolar” notion of political and economic power at a world level, we could end up, under this logic, into a “unipolar” world after the demise of the Soviet Union, which could hardly be the case in economic and political terms given Japan’s and the EEC’s rapacious nature.

60All this was pointing towards a theorization that Furtado was trying to undertake at a much more general level, which explains his onslaught, once again, on economic (positive) science, found in Economic Development: A Myth (1974). Furtado was thus preparing new theoretical ground, which takes us to the next stage.

The Prophet Returns: 1975-2004

61In Preface to a New Political Economy (1976),17 Furtado made desolating claims: “structuralism” had made an important and heroic assault on the fortress of conventional economics. The absence of its categories in the fifties and sixties would have been catastrophic for Latin America, but it had served its purpose and had entered a process of “diminishing returns.” In isolation, such pronouncements might have seemed to many as the end of a long theoretical tradition in Latin America. However, for Furtado it was a period of theoretical experimentation, proposing nothing other than a complete overhaul of conventional and structuralist economics. What was needed, Furtado went on to argue, was not so much an interdisciplinary approach or method to study Latin America’s problems, which was to be his claim in his next book, Creativity and Dependency (1978), but a new “general theory of social formations.”

62To undertake this theoretical reconstruction, Furtado rescued a forgotten view from his younger days: the notion of the “surplus product” (Furtado 1954). The category was to serve an explanation of the rise and fall of empires, nations and the “industrial civilization.” Its appearance and reproduction had specific mechanisms of appropriation (“authoritarian” and “commercial”) by specific social classes, as well as the way it was distributed. Whereas in Preface to a New… (1976) Furtado posed these questions in terms of a “Preface” of a book yet unwritten, his future texts provided the new theoretical vocabulary emanated therein, which can be seen in his 1980 book A Brief Introduction to Development. An Interdisciplinary Approach, which comfortably intermingled with his “old” version of “structuralism.”

63Furtado turned to the Physiocrats, rather than to classical political economics, to reconstruct social theory through a new perspective on the role of accumulation but with special reference to underdeveloped countries. What was required was a new theory of accumulation, rescuing those elements which were omitted by classical and modern economics alike. In this sense, although Furtado did not acknowledge it, he moved closer to the ideas of Marx. Furtado showed that modern economics, especially since Keynes, saw the process of accumulation as a liquid corporeality form reservoir, represented in the account books, which could be freely put into operation. Furtado explicitly ridiculed the notion that digging holes to fill them up again or constructing China’s Wall could be considered as “productive.”

64Examining this theoretical move, it would be difficult to question Furtado’s position without simultaneously bringing down with him a long-established tradition in modern and classical economics. But the theoretical status of his postulates changed when he elaborates the distinction between the “accumulation” that takes place in the industrialized countries and an apparently similar process in underdeveloped countries. Furtado argued that in the latter case, a certain “accumulation” was not “productive,” because it took place “outside” the productive process. Here he seemed to be pointing to a whole series of uses of the “surplus” to generate luxury goods which do not amplify the radius of the productive value chain, nor does it intensify the productive capacity of an economy. But even if this interpretation of Furtado were adequate, it was still not very clear which of the production processes were “productive” and which were not, in terms of the existence or otherwise of a “surplus.”18 In other words, if the “appropriation” of the surplus is achieved through the process of production, which are those components of the labor process which were lacking in competence to generate a “surplus” in a specific geographical location?

65During the 1980s, with the coming to end of the military regime and the democratic movement in progress in Brazil, Furtado was allowed to return to his country and formed part of a political group built around the former Brazilian Democratic Movement (MDB) that along with the participation of other political clusters led to the creation of the Party of the Brazilian Democratic Movement (PMDB). In fact, Furtado kept close to the PMDB, taking on an advisory role on economic matters during the first five years of 1980s. During these years, he decided to concentrate on his theoretical-political work.

66The notions of accumulation inside and outside of the productive system, and the notion of the surplus mentioned above in his previous books, remained in the background or they were conflated with the more orthodox meanings of the declining “capital-product ratio” for the economy. Aside from his return to Brazil, his advisory role, and later incorporation into Sarney’s government, he was obliged to write and reformulate answers relating to his participation in past economic policies.

67The books that Furtado wrote during this period showed him to be “putting history in order,” clarifying and establishing responsibilities. As a public figure, Furtado underwent important changes. In 1985, he was named Ambassador to the European Economic Community, and shortly later Minister of Culture, a responsibility from which he resigned at the end of July of 1988.

68During this interlude, in contrast with his immediate past, his writings suggested an eminently “political” strategy which formed part of his commitment to a democratic regime and the reconstruction of a more just social economic development.

69These years saw the publication of three almost autobiographical texts. The Fantasy Organized (1985), which narrated of his activities prior to and during the 1950s while he occupied his post within ECLAC, the struggle for its creation. The Wrecked Fantasy (1989), which dealt with the interlude in which he headed certain governmental departments in Brazil (1958-1964) until he became the Superintendent of the Northeast (SUDENE) and as Minister of Planning (these two books, by way of retrospective, described his intellectual formation and insertion into the administrative apparatus of the Brazilian State). Finally, The Winds of the Change (1991) concentrated its deliberations around an endless number of thematic theoretical-political discussions, as well as his experiences as an “exile” in different countries between during the sixties and eighties. Special reference was given to his visits to various universities and international institutions. The text also included several unpublished texts from the past which were censored by the military regime and his reflections on some countries. Nevertheless, I reiterate that these were texts that tried to pinpoint “the responsibility that fit him” as the intellectual and State policy designer.

70Finally, an account in his own words of his theoretical evolution appeared as an article in 1987 “Underdevelopment: To Conform or Reform.” The autobiographical books (the two “fantasies” of 1985 and 1989), The Winds of the Change (1991), as well as Brazil After the “Miracle” (1981), are integral texts in the sense that they apparently were designed as such.

71Previously, The New Dependence… (1982) revolves around two central chapters, and the format is directed towards the academic establishment. In contrast to the latter books, we see No to Recession (1983), and Culture and Development (1984), which incorporated a series of articles with relatively dispersed themes, initially in the form of journalistic notes and writings appealing to the general reader. In the former book, Furtado’s position is spelled out with respect to the problem of the external debt, a thesis that was practically adopted by the Government of Sarney when Furtado oversaw the Ministry of Culture. The latter, through the thematic progress of its chapters, clearly denotes the exercise of his role and responsibilities assumed under Sarney’s government.

72On the other hand, almost all the articles produced during this decade showed an approach towards the “culture” of Brazil and the participation and misfortunes of the diverse and heterogenous regions in their process to constitute the “nation,” as well as their latent fragility given the incommensurable inequalities between and within them: the inherent heterogeneity of the social relations product of the power asymmetries. Therefore, Furtado seems to be presenting the need for a new sort offederalism, which he viewed as vital to integrate the great masses that had remained unempowered by the “bad” development of the Brazil under military rule. In Culture and Development (1984) we find a chapter dealing with the notion of an “endogenous development.” Likewise, he spoke about the functions of universities, and especially those located in the Northeast, where the role of a simple instrumental rationality, if not questioned, could only but delay the enormous projects of research still needed to be undertaken.

73The discussion centered around the role of the “creativity” of man seen previously in other books, and the fundamental importance of a clear political will to materialize its visions and projects. Retrospectively, he tells us that the existence of greater quantities of information to face the crisis that afflicted the country made it feasible to surpass the role of “spectators of history” (Furtado 1984: 33), and become its true agent. Furtado believed possible, notwithstanding the conceptualization of the world economy and the diagnosis of Brazil, an “endogenous development” process for the country which could break the chains of the transnational capitalist exclusionist model. In fact, we had to wait many years to hear him propose concrete approaches and measures around the “self-transformation” of Brazil, a problem that recalled his perspective of the first years of the 1960s.

74The discourse on the role of national sovereignty, as the means to treat the problem of external debt, and how to confront social inequalities, exhibited an eminently political diagnosis. At the same time, the detailed analysis of the Brazilian situation and how to defeat adversities and promote its development under the logic of an “auto-centric” capitalism, echoes the return of his “structuralism” as a central guide with its emphasis on internal and external structural factors.

75We could also note that he incorporated the theoretical vocabulary present in the texts of the recent past about the conformation of a new “capitalist world totality.” The analysis of the configuration of world capitalism under the leadership of the MC, a totality safeguarded by the United States, does not seem to give rise to a “political superstructure” that could organize the new emerging entity. On certain occasions this was advanced as a process still in the making; or alternatively, the power of the United States was simply assumed as the organizing umbilical Center of the whole.

76Furtado emphasized simultaneously the consequences of a relatively high growth rate of the Brazilian economy, and the fact that it might be materialized within its domestic market, without forgetting its highly negative exclusionary effects. He held that the future of Brazilian capitalist industrialization, supported within its own domestic market, would suffer serious traumatisms if deep “structural transformations” were not carried out.

77The description of the so-called “economic miracle” underlined most of its aberrant consequences: vast inequalities at the level of personal incomes as well as intra and inter-regional dislocations. It was by no means an apologetic description of the growth of the Brazilian economic formation; the description of its economic history was overturned to emphasize that the “miracle” created debt and dismantled the economy. Under the weight of a sizable foreign debt burden correlated to the pattern of the industrialization adopted during the 1970s, the economy began to lose control of its “coordinating Centers,” and Furtado now presented its recovery as one of the first tasks to carry out; the economy had entered a process of total financial disorder as a consequence of the internationalization and the modus whereby many pompous projects were financed.

78The State’s participation in economic infrastructure and productive sectors was carried out without any type of programming or control. Brazil After… (1981) and The New Dependence… (1982) showed the vital need to transform Brazil’s industrial pattern. The central theme of No to Recession… (1983) was therefore already implicit in the texts. The industrialization pattern generated in Brazil, with highly intensive capital production functions, required a relatively higher degree of savings. The government opted to index savings invested in domestic bonds to the foreign exchange rate, which led to the conversion of the dollar into a currency of “first” importance and the cruzeiro, the national currency at the time, into one of “second” importance. In addition, the Treasury paid interest rates according to international rates and lent in local currency at almost a negative rate of interest.

79Public sector companies “hypertrophied,” lacking any control or any kind of programming, simply fell heavily into debt with the euphoria of the Brazilian “miracle,” even though they were created primarily with the intention of raising exports and acquiring foreign currencies. Inflationary “pressures” (No To Recession… 1983) were essentially the consequence of low productivity levels and disarticulated production units, not a “monetary” phenomenon. It was more than obvious that they required restructuring, reminiscent of the “structural” theory of inflation developed in the early 1950s.

80Subsequently, when Brazil came close to moratorium and was forced to renegotiate its debts with the IMF, the strategy promoted by this institution implied repaying the debt and simultaneously dismantling large parts of its industry, as had been previously experienced in Argentina and Chile.

81But the inflationary phenomena could not be resolved by the application of monetarist medicine because two quite different forces were in play. On the one hand, the “propagation” was the fueling mechanism of the inflationary “pressures”19 related to the control of the financial apparatus and the manner by which they were articulated within the Brazilian economic structure, and on the other, “pressures” the means by which distinct sectors defended their income level. The restoration of the industrial organization was necessary to down-tone the origin of the “pressures.” In other words, “inflationary” processes are not a monetary phenomenon, they represent the antagonism and the manner whereby agents struggle for a pattern of redistributing income.

82He maintained that a greater integration into the global market through the export of manufactured goods was necessary and unavoidable, but argued that given the technological surpluses of industry and the circumstances of the “world economy” at the time (mid-nineteen eighties), a selective positive discrimination should be made in favor of some of its branches and sectors.

83If the economy, and especially public sector industries had been held on some kind of leash, they would not have been able to get into the disastrous debt situation that they did, and their produce would have been incorporated quickly into the productive circuits, reducing the demand that they themselves procreated, which would have lessened much of the inflationary “pressures,” and “propagation” forces that ensued.

84The problem resided in raising domestic productivity so that it could cope with the enormous existing demand. According to Furtado, the preeminence of the neo-liberal discourse on the market, viewed as the savior of the situation, complicated matters because what was in fact needed was the establishment of an internal globally programmed strategy and a consensus among the diverse social and economic forces, so that a fair distribution of the sacrifices among them could be constructed.

85Rising prices are little more than a sign that certain social groups are being sacrificed. In an analysis of the serious inflationary situation afflicting Brazilian companies, it was necessary to distinguish the basic causes (the generating foci of pressures) from the propagating mechanism of these price pressures. The expansion of the means of payment and monetary correction are simply the propagation mechanisms (Furtado 1982: 45).

86In Furtado’s view, freely escalating wages by themselves do not generate inflation, but they do enable its “propagation,” that is to say, they enable the materialization of inflationary “pressures” to occur. Wage compression breaks the process of propagation and complies with its assignment to concentrate income. Inflation does not end through an institutional setting, in terms of a change in the statutes of the central bank or fiscal reforms, etc. It is:

necessary that a consensus ensue at the level of those who make decisions with respect to the environment of action of the government regarding the priorities which the action of the state should obey. In modern pluralist societies that consensus is obtained, with the mediation of the political class, through the representative organs of the popular will. (Furtado 1982: 46)

87The roots of the inflationary pressure stem from excessive incentives given to the private sector which in turn generated excessive public sector spending. To eliminate these roots, relative prices should be restructured, to maintain levels of exports without subsidies, and to adapt global expenditure of the State to its effective capacity for collecting real resources (instead of bonds articulated to a rate of interest established externally), without reducing the private sector’s productivity and without generating social tensions.

88The illusion of the “Brazilian miracle” was empowered and deepened in the Brazilian economy through the country’s external debt. It was believed that the economy was at its full peak when the circumstances of world trade were not promising. With the oil “shock” of 1973 came the need for extensive structural transformation and an alternative pattern of economic development which was less reliant on the consumption of oil. In fact, external debt as a momentary “solution” obstructed viewing the fact that the trade balance was no longer favorable, and that an intense restructuring of the whole economy was required. The capital account showed a surplus due to the ridiculous conditions that were imposed on capital entering or leaving the country; at the same time, both the form in which domestic bonds or treasuries were indexed to external rates of interest as well as the fluidity of debt, procreated the idea of an endless economic “boom.”

89Notwithstanding, Furtado argued that the strategies to face the problem of external debt and its repayment required that its “solution” should be posed as part of a policy “problem” and its alternatives. In the first instance, the payment of interest on the debt should not sacrifice growth, which should necessarily conform the basis for the continuance of such repayments without restricting economic policy, which obeyed a view of opening up the economy without any sort of differential discrimination towards specific sectors. The insertion into the international marketplace should be promoted in those branches and sectors whose possibilities of adaptation and survival were more reliable. Nevertheless, the reports of the IMF policies prompted the adoption on the part of Brazil of an internal/external policy with the aim to produce dollars, which invariably meant reducing domestic social expenditure, assuring the free incorporation of international segments into the national economy and the dismantling of the national productive apparatus. Through “recession” and the decrease in public expenditure, imports vital for continuing the process of industrialization were reduced considerably, which implied elevating the overall cost of this process.

90Subsequently, Furtado did radicalize his position on the debt of Third World Countries, and argued that “moratorium” as the “smaller of all evils,” (Furtado 1999) founded on the basis of the eleventh chapter of the Code of Bankruptcy of the United States of America.

91On the other hand, the context of the political struggle for the reconstruction of democracy in Brazil at the beginning of the eighties, and the structural instability of its economy, cannot explain the theoretical passion with which he returned to the issue of the Brazilian Northeast. The question of the “Northeast” was always one of his crucial life existence themes, both in personal and political terms, whilst the interpretation of the industrialization process was the other.

92One should, therefore, examine the evolution of the Northeast post 1964, and their effects on the views of this Brazilian “Northeastern” economist. Almost two decades after the coup d’état, he proposed again that the SUDENE acquire independent functions of direction over the future of the region, which under the military regime had been destroyed, losing its executive capacities in exchange for a more deliberative participation. Because it was an important advisory entity to the Executive it was integrated, like other entities, within the confines of the Ministry of the Interior.

93Without a doubt, important changes in Furtado’s perspectives were clearly visible here. In the first place he gave a high priority to the promotion of self-administration of the Northeast on the part of its population so that it could solve “its” own problems. The thesis repeated was that a new model of development would have to be invented by the people of the Northeast themselves. The importance was fundamental and thus invited the need to constitute “cooperatives” and a process of land reform which could release the “creative capacity” of the local population.

94The leading discursive element was its “anti-technocratic” stance and the demystification of the role of the “Prince” as a supreme guiding Center of the process, which went a long way to criticize his own previous conceptions and policies. Overall, the industrial structure had not undergone great mutations in the Northeast; the industrial sector did not elevate its relative participation in a resounding way, and the agricultural sector maintained its relative regional importance. The absence of interregional industrial links can be explained by the predominance of “the dynamic” industries, highly dependent on resources and products originating from the Mid-South. Thus Moreira (1976) concluded that it is easier to explain the situation of the Northeast as part of a centripetal expansion of capitalism, than as a regional problem unto itself.

95Furtado’s more pragmatic vision underlines the issue that the fundamental problem is no just eradicating inequalities, which exist everywhere. Although eliminating inequalities is important, what is needed is rather the:

transformation of society in Brazil’s northeast in order to enable development to effectively benefit the mass of the population. If the standard of living of the northeastern rural man is not raised deliberately, if he continues to be subjected to hunger and ignorance, the social structure of the whole country will tend to remain semi-immobilized, reproducing and worsening the extreme inequalities that characterize it at the present moment. The strategic target should be to open up space so that those that are really at the bottom of the social scale can become active agents of development. That first boost, which can finally break the structures that imprison those that are the lower social levels, will only be produced as a consequence of a decided political will. (Furtado 1981: 121)

96During the 1990s, Furtado reiterated the need for social reforms and ways to sponsor a policy which could break the stronghold of the exclusionary and imitative Western-centric pattern of Brazil’s development: Global Capitalism (1999) and Looking for a New Model (2002). In terms of these ideas, many dependence theorists and critics of Furtado in their younger days became part of his entourage and came under his sway. He offered his intellectual support everywhere, especially to the “movimento sem terra,” (landless movement), as well as to President Lula, on whom he lavished plenty of elegant words hoping he would have the “courage” to undertake the land-reforms so vital to kick-start the social changes Brazil needed. He struggled for social equality until his very last days through an endless array of proposals and proclamations.

97Celso Furtado died on the very same day that Lula administration deposed his protegé, Carlos Lessa, from the presidency of the Banco Nacional de Desenvolvimento Economico (BNDES. National Bank for Economic and Social Development). At his death, he had become a world-renowned personality, and various universities had acknowledged his considerable abilities and achievements by awarding him honorary doctorates. In 2004 a movement grew within Brazil, which put him forward as a candidate for the Nobel Prize for Economics of that same year. In recent decades, few intellectuals in Latin America can be said to have kept the flag of democracy and development flying so long and as high as Furtado. Long live Celso Furtado!