José Luis Oreiro is a professor of economics at the University of Brasília in Brazil, the University of the Basque Country in Spain, and the University of Tuscia in Italy. He also is a Research Associate at the Center for New Developmentalism Studies at the Getúlio Vargas Foundation.

Together with Raghavendran Srinivasan he coordinates the [DM] Developmental Macroeconomics: Perspectives from the Global South Research Area

At the 2024 EAEPE Conference he organised the Special Session ‘New Developmental Macroeconomics After the End of Washington Consensus: a Tribute to Bresser-Pereira’ to shed light on the work and legacy of one of Brazil’s most influential economist of the recent decades. 

Questions from Daniel Moura da Costa Teixeira, Ph.D. Candidate in Economics at the University of Brasília and EAEPE Member

What was the main purpose and motivation to organise this special session?

J.L. Oreiro: The immediate purpose was to honor Professor Luis Carlos Bresser-Pereira – the greatest Brazilian economist alive – on his 90th anniversary. Professor Bresser-Pereira played a critical role in the development of the theory of inertial inflation in the early 1980s, which was fundamentally important for the success of the Real Plan (1993-1994) that finally ended the problem of high or strato-inflation (using the terminology created by my former PhD supervisor, Fernando Cardim de Carvalho). Bresser-Pereira is also the founding father of the Brazilian New-Developmentalist School, which has attracted the attention of many young scholars in Brazil, Latin America, and Europe in the last 10 years. Finally, Professor Bresser-Pereira was also a policy-maker: he was appointed Minister of State in Brazil three times, first under José Sarney’s administration as Minister of Finance and Economics (1987), then as Minister of Public Management and State Reform (1995-1998) under the first term of President Fernando Henrique Cardoso’s administration, and finally as Minister of Science and Technology (1999) under the second term of President Fernando Henrique Cardoso’s administration.

What have been the contribution of the selected participants and the session overall?

J.L. Oreiro: I think that the selected scholars – including myself – showed how the ideas developed by Professor Bresser-Pereira have spread not only in Brazil but throughout the entire Western world. As a matter of fact, new-developmentalism, with its emphasis on the links between structural change, industrialization, macroeconomic policies, and real exchange rate, is important not only for Latin American economies but even for high-income countries in Europe that are now facing the problems of deindustrialization and decreasing international competitiveness. Moreover, Europe can learn from the Theory of Inertial Inflation how to fight inflation without an unnecessary increase in the rate of unemployment with a tight monetary policy. During the Real Plan, Brazil was able to reduce the rate of inflation very quickly while economic growth accelerated due to increases in real wages. The key to success is to reduce the level by which current inflation is determined by past inflation. Income policies are the key to accomplishing this.

What is the importance of this special session within the context of the EAEPE Annual Conference?

J.L. Oreiro: I think this special session was a unique opportunity for European economists to discover the originality and relevance of economic theory developed in Latin America, particularly in Brazil. Economics has traditionally been considered a British-American science: the so-called “rest” – to use the expression created by Alice Amsden – are supposed to learn from the books and articles produced by economists working in the USA and the United Kingdom. Although it is impossible to deny the great importance of American and British universities in developing economic thought in the last 100 years – for better or worse – Latin America, since Raul Prebisch and ECLAC, has played an important role in creating a school of thought regarding economic development. New-Developmentalism is, on one side, an attempt to create a developmental theory that is compatible with the new reality of Latin America, after the Washington Consensus and the rise of China. On the other side, New-Developmentalism is also a synthesis – in Hegel’s sense – between Classical Development Theory, Latin-American Structuralism, and the Post-Keynesian Theory of Demand-Led Growth. So new-developmentalism can be an important bridge to connect Europe with Latin America.

Could you discuss the importance of pluralism, the integration of Global North and South perspectives, and Professor Bresser-Pereira’s contributions to the development of economic theory?

J.L. Oreiro: During the annual meeting of the Association for Evolutionary Economics (AFEE) in which Bresser-Pereira received the James Street Scholar for 2012 and participated in the panel “Institutionalism and the Great Crisis”, Bresser delivered a lecture entitled “Why Economics must be a modest and reasonable science”. The major subject of the paper is to discuss the nature and method of economic thinking. For Bresser, economics or political economy, as he prefers to call our field of expertise, is a major science “because it has as its object something that is central to human life: the economic system, how people organize labor and production, and how they allocate income – in other words, because men and women dedicate a large part of their existence to work and make a living in market-coordinated economic systems that economics seeks to understand and explain” (Bresser-Pereira, 2012). But economics must also be a modest science “because, as with all other social sciences, its best models – the models that really make sense – are simple and open; or because its predictive power is limited in so far as (thank God) men and women continue to be free individuals making choices under uncertainty and according to criteria that are not constant. Consequently, economists or policymakers should also be modest and reasonable; they must acknowledge that they have a limited capacity to predict the future” (Bresser-Pereira, 2012). To be a modest science requires the acknowledgment that economics is not a hard science like Physics, in which there is a clear and defined frontier of knowledge created by a positive resolution of controversies between economists. As Pérsio Arida states in his classical essay of 1983 about rhetoric in economics, the history of economic thought tells us that controversies in economics end not because a final conclusion is reached but by the exhaustion of the sides under dispute. Due to this fundamental shortcoming, economics must be a plural science: different paradigms must compete with each other to increase the understanding of the functioning of the economic system. Diversity, as it occurs in biology, is a very good thing for economic reasoning.

What advice would you offer to young scholars and students who are keen on the topics covered in this special session?

J.L. Oreiro: Always keep an open mind for new ideas and approaches, and realize that economic issues can differ between North and South countries. For example, among European post-Keynesian economists, a theme of fundamental importance is to discuss the relation of income distribution between wages and profits and the level of aggregate demand and the rate of economic growth. This can be an important issue for mature economies in the sense of Kaldor (1967), where the main limit for economic growth may be due to a lack of effective demand; but this is not the case for dual or peripheral economies in Latin America, Africa, and Asia where structural transformation is far from complete. The way that a mature economy works is not the same as a peripheral economy. This is a fundamental tenet of Latin American structuralism, which has recently been recognized by post-Keynesian economist Peter Skott.

Continue reading on REPE’s most recent Call for Papers:
Or go back to the Editorial Page