The independent Central Bank and the 20 cents.

The neoliberal movement gained momentum in the United States and Great Britain amidst the stagflation trend of the 1970s. Neoliberal intellectuals argued that the economic irrationalities of democracy were at the root of economic imbalances.

They did not blame the rent-seekers who would be the target of criticism regarding the industrialization strategies of underdeveloped countries, but rather the democratic overload and expectations brought about by excessive development.

The abuse of wage demands exceeding labor productivity and the overburdening of public services beyond the capacity of societies to save were at the root of stagflation. Using pre-Keynesian arguments, it was said that redistribution should be contained in the name of savings and accumulation.

Therefore, the neoliberal platform involved not only expanding the role of the market and competition to select the best and punish the lazy: privatization of companies and public services, contraction of social spending, deregulation of the labor market, and liberalization of capital flows. It was also necessary to shield neoliberalism from democracy, in case irrational citizens considered that the promise of neoliberalism was taking too long to materialize.

The resilience of neoliberalism after its crises.

The promise, in fact, favored minorities: neoliberal globalization generated cycles of short-lived euphoria and long crises, driven by inflation and deflation of assets such as land, houses, stocks, and currencies.

The crises generated "lost decades" of low growth, social inequality, and fiscal crises in the peripheries of capitalism since the 1980s; in Japan in the 1990s; and in developed countries after 2007.

Even after devastating crises, reversing neoliberalism is not easy. Firstly, because crises are followed by slow recoveries, which increases public debt and creates a lasting fiscal crisis.

Secondly, because liberalization allows "markets" to promote capital flight from economies adrift due to the very crises generated by neoliberalism, and then impose conditions for its return.

In these circumstances, political groups opposed to the welfare state and/or interested in acquiring state-owned companies take advantage of the fiscal crisis to, together with the financial markets, demand reductions in social spending and privatizations.

This applies today to both the peripheries and Europe: financial markets don't vote, they veto. Their veto power is all the greater the more profound the reform of the institutions deemed necessary to ensure investor confidence.

A central bank independent of whom?

The most important one? An independent Central Bank, like the current European one. In general, banks are not independent of the neoliberal view of financial markets and interpret inflation as a result of excess demand: a product of wage abuses, consumption, and public spending.

The argument that increasing wages and social rights harms savings, accumulation, and growth is pre-Keynesian and has been refuted in the last decade by the experience of growth with income redistribution in several South American countries, such as Brazil.

Since decisions to save (abstain from consumption) do not necessarily lead to investment in productive capacity (instead of hoarding), limiting consumption does not imply preserving the growth rate with increased investment.

Investments need markets, and the mass consumer societies created by the deconcentration of income, under democratic conditions, were and are a condition for the expansion of investments.

The neoliberal proposal is to increase unemployment in order to reduce real wages and consumption, which would presumably increase savings and productive investment.

It is true that wage increases can create temporary cost pressures (or drops in profit margins) where productivity does not grow at the same rate. However, it is difficult to imagine sustained productivity growth without investment, investment without markets, and markets with the austerity therapy proposed by neoliberals.

Proponents of an independent central bank in Brazil are neoliberal economists associated with the campaigns of Aécio Campos and Marina Silva. They do not propose aligning Brazil with the Federal Reserve: partly because of democratic resistance and partly because the US issues unlimited global currency, its central bank is, in practice, an exception among independent banks and is legally obligated to balance maximum employment, price stability, and moderate long-term interest rates.

Neoliberalism versus social rights

Neoliberal discourse blames expanding jobs, real wages, and increasing social rights for recent problems of slowdown and inflation, without any consideration of the international context or cost shocks independent of the level of economic activity. This was made clear in a recent statement by Eduardo Giannetti, Marina's main economic advisor.

According to him, because of the social rights enshrined in the 1988 Constitution, "the Brazilian state doesn't fit within the GDP, and this is a structural problem that demands a long-term dialogue with the whole of society." Since financial markets don't vote, it's necessary to convince the population that the blame for inflation ultimately lies with themselves.

In Brazil today, we are experiencing a dispute between those who want to continue expanding real wages, social rights, and public goods, and those who believe that democratic overload generates economic irrationalities that end up harming the very citizens who are passionate about their cause. The former were in the streets in June 2013; the latter are in their offices proposing to isolate economic policy from the pressure of the streets.

Is it possible to reconcile these two forces? Is there a Third Way that reconciles these visions and interests? In the current Brazilian context, nothing is more unrealistic than a new policy that promises to reconcile the interests of those who fight for the expansion of citizenship rights and those who defend an independent Central Bank. These groups, like the former, will not be content with twenty cents.