Right or wrong? The Lula-era ideal of equating government with housewife.

President Lula once again spoke about his mother, Dona Lindu, as the greatest economics teacher he ever had.

His lessons lead him to apply them to the exercise of power as the epitome of economic wisdom.

According to Lula, Dona Lindu should not spend more than she earns.

In this sense, it is necessary to practice budgetary balancing as a factor of fiscal responsibility for the actions of a statesman.

The ideal of Lulaism, in economic terms, therefore, is to achieve what is most dear to the adherents of the 19th-century neoliberal school, when the gold standard, dictated by powerful imperialist England, was in effect to maintain the strength of the pound sterling.

One could not spend beyond the gold reserves available to England's debtors.

If he did that, he would have to cut spending to balance the budgets.

The new imperialist power, the United States, is repeating England's example through a new imperial model: the neoliberal economic tripod, primary surplus, inflation targets, and floating exchange rates.

Classical economists of the 19th century, as well as neoclassical economists of the 20th and 21st centuries, idolize zero deficits or primary surpluses, just as is done today in Brazil under the current fiscal framework.

It is the recipe of bankers, past and present, dictated by Faria Lima (the financial district of São Paulo), that leads the Central Bank to maintain high interest rates as a remedy to combat inflation.

This remedy is now considered by Minister Fernando Haddad, following the sharp 1 percentage point increase on Wednesday, to be excessively bitter and jeopardizing the economic recovery.

Moreover, there will be no recovery, but rather a decline from 3,5% in the GDP recorded in 2024 to a projected 2,5% in 2025.

Haddad is echoing what former minister Guido Mantega told TV 247.

EXALTING A MISTAKE: THE ZERO DEFICIT

Neoliberal monetary theory is exactly that: the idolization of a zero deficit, yearning to achieve the eternal glory of a primary surplus.

Last year in Brazil, the neoliberal fiscal framework produced a deficit of 0,1% of GDP.

President Lula rejoiced, repeatedly saying that 0,1% is zero.

It was a triumph!

The ideal of capitalism, therefore, under budgetary balance, as advocated by the English classical economists, fanatics of neoliberal balancing activism: to move towards zero or negative wages in the most extreme expression of the term.

Would Dona Lindu want this for her children, condemning them to eternal misery?

To boast about fiscal responsibility, with zero deficit or primary surplus, would that be the height of social irresponsibility or not?

Haddad is already saying that the Central Bank's remedy, this time, was counterproductive, pushing the Selic rate to 13,25%, while inflation was below 5%.

Who will invest in production when they can earn much more through speculation?

Lula, appearing calm, said he was not surprised.

The monetary theory that guides neoliberal political economy towards rigid budgetary equilibrium is ideal from the bourgeoisie's point of view, but would this be the objective of the workers, who harbor the opposite goal?

Does the exaltation of budgetary balancing, the ultimate ideal of the housewife in managing the domestic economy, as a parameter for managing the national economy, lead workers, through the president's actions, to worship the golden calf?

The closer Haddad gets to a zero deficit – 0,1% is zero! – the worse or worse the lives of wage earners become, or not?

That's why Lula is distressed.

The more the government caters to capital's demands for a zero deficit or primary surplus, the more its popularity declines, as evidenced by the latest Quaest! survey.

Would relentlessly pursuing the ideal budgetary target prevalent in the 19th century, during classical capitalism, which culminated in the 1929 crisis, be the right path?

THE STATE IS THE CAPITAL

Does the State have to behave like Dona Lindu?

Is it true that this theory equates a housewife, who lives on a fixed income, with the State, whose main characteristic is to issue currency to drive capitalism, based on supply and credit?

State debt, as the Keynesian economist Luiz Gonzaga Belluzzo, one of the icons of the Campista school of economics, says, becomes credit and credit becomes debt, indefinitely, in the uninterrupted process of production and consumption.

The government's spending today becomes its revenue tomorrow when it performs its essential function.

Has Lula abandoned his maxim that social spending is disposable income for consumption that drives the economy, in order to surrender to budgetary balancing?

Is it possible to compare the situation between the individual and the State, or between the State and the housewife?

Dona Lindu does not print money, therefore she could not spend beyond what she earns, unless the State had the power of seigniorage, as happens with the greatest economic power on the planet, the United States.

The American empire, for example, exercises the hegemony of the dollar through the strength of its economy and the weapons that are financed by monetary emissions to fund wars – that's a whole different story!

In modern capitalism, the State, by possessing the ability to issue currency, is capital, power over things and people.

As capital, it mobilizes productive forces to leverage credit, consumption, production, tax collection, and investment—that is, the classic capitalist syllogism that results in tax collection.

The imbalance in this process arises not because the government, in control of the State, spends more than it collects, or vice versa, as neoliberals ideologically claim, but because there is a struggle over the distribution of this amount of capital put into circulation.

In the capitalist system, the entrepreneur, owner of the means of production, exploits the worker through surplus value, appropriated during the workday.

The workforce produces a value far greater than what it earns during the workday, so the extra work is appropriated as profit—unpaid labor—by those who own the means of production.

Therefore, class struggle exists, resulting from the imbalance between capital and labor, as long as capitalism exists.

By appropriating unpaid labor, the capitalist reduces wages and confers upon capitalism its ultimate essence: being condemned to suffer from chronic insufficient demand, as Karl Marx, the author of Capital, stated, throwing the system into underconsumption and a tendency for the rate of profit to fall, which the capitalist government attempts to mitigate by granting subsidies, debt forgiveness, and tax exemptions to capitalists.

Because it is essentially capital, the State, according to Keynes in "The General Theory of Employment, Interest and Money," represents the only truly independent economic variable in capitalism, as it controls the quantity of the money supply in capitalist circulation.

When it exercises this power intrinsic to the capitalist state, in the service of capital, says Keynes, it produces four simultaneous converging factors:

1 – It raises prices;

2 – It reduces wages;

3 – It reduces interest rates and public debt; and

4 – forgives capitalists' debt contracted on credit.

Keynes emphasizes that the combination of these four factors results in capitalist profit, which he calls the Marginal Efficiency of Capital.

It is at this moment that the businessman is willing to invest because he feels favored by the positive expectations, since, according to him, the economy depends on expectations.

Chinese lesson demonstrates that balancing act

BUDGETARY IS ECONOMIC SCHIZOPHRENIA

The countries that, throughout history, have become superpowers – the United States, Japan, Germany, France, Italy, for example – are all deficit-ridden, although diversified and in crisis under the current advance of financial imperialism, in the context of global financialization.

None of them registers a zero deficit, much less a primary surplus, exceeding GDP by more than 100%, as a factor in building national wealth.

If wealthy capitalist governments committed to zero deficits or primary surpluses as essential economic policies, they would lead their people to revolution, although that direction is being taken with the renewed rise of the fascist right.

The socialist ideal was erected in opposition to the capitalist attempt at a zero deficit or primary surplus.

China stayed out of this because it follows Marx and Lenin.

They practice an unorthodox monetary model, controlled by public banks, under the supervision of the Communist Party.

If the state borrows in national currency under the organization and planning of the Chinese Communist Party, it sustains low interest rates and high investment, while simultaneously controlling inflation.

It's that thing called Chinese planning economics, the political economy of the Chinese Communist Party.

Through this strategy, the Chinese achieve high productivity, which keeps inflation low, while they advance with perfectly controllable deficits.

In this pre-socialist scenario, wages increase because productivity eliminates surplus value, a fundamental instrument of liberal and neoliberal capitalism for the exploitation of labor.

The elimination of surplus value through increased productivity, via heterodox, anti-neoliberal monetary policy, is a driving factor in wage growth.

It is socialist dialectics in action, as economist Elias Jabour points out.

Xi Jinping explains this in the White Paper on Chinese Socialism.

If the State incurs debt in national currency under the organization and planning/projection of the communist party, it sustains low interest rates and high investment.

Here is the unorthodox remedy that refutes the domestic economy of budgetary balancing.