Industrialization, Rural Exodus, and the Rise of Favelas, 1930-1964

Until the beginnings of the 20th century, Brazil had an export oriented economy based on primary goods and an oligarchic political structure. This configuration entered into a process of deep structural change around 1930. The main cause behind this shift was the collapse of the financial markets and the ensuing global depression. The Brazilian elite had hitherto depended upon the export of primary products, with coffee providing over 61 percent of Brazil’s export earnings during the period 1889-1933 (Peláez 1972, 64). However, this model ceased to be viable when global trade plummeted, dragging down with it the prices of raw materials and the influx of foreign capital into Brazil (Hilton 1975, 758). In dramatic fashion, the international price of coffee fell approximately 65 percent in the wake of the crisis (Peláez 1972, 33). The immediate response of the Brazilian government was to avoid the complete collapse of the coffee industry. Between 1931 and 1944, the Brazilian state purchased approximately 78 million sacks (equivalent to the worldwide consumption for three years) of excess coffee, and destroyed them, in an attempt to reduce the supply and maintain the prices (Fausto 1999, 200).

Nevertheless, these agrarian subsidies would prove to merely be one piece of the response to the crisis. The rise into power of Getúlio Vargas in October 1930 marked the beginning of a shift towards a broader plan of industrialization that transformed Brazil. Official documents from the time show that Vargas and key members of his administration came to understand industrialization as paramount to national security. They argued that failure would condemn the Brazilian elite to play the role of a colony among the industrial powers (Vargas 1938; Hilton 1975, 758). The new strategy required an increased centralization of power into the hands of the State. Among other policies, Vargas dissolved the Congress and State Legislatures, replaced state governors with hand-picked Federal representatives, and monopolized military, monetary, and fiscal authority (Fausto 1999, 199). The crisis had created the perfect opportunity for this shift in the governing elite. Weakened in their economic power and dominance, the landed oligarchy lost the control over the state apparatus. The power to dictate Brazil’s policies and its future now resided with a new cadre composed of industrialists, politicians, and military leaders, among others (Fausto 1999, 196).

Despite the shift in power, patterns of land ownership did not change. The oligarchy still presided over the latifundios, and exercised absolute power over peasants and workers. Vargas only subordinated the agricultural sector to the state, gained control over the social surplus generated through export crops,⁴ and used it to subsidize the industrial sector. The establishment of autarquias, semi-autonomous administrative units used to supervise and direct the activities of selected areas of the economy, is a good illustration of how this was achieved. It allowed the central government to regulate, through production quotas and other measures, the supply of a commodity to meet the target market demand (Gordon-Ashworth 1980, 88-89).

As a result of Vargas’s policies, industry became the leading growth sector of Brazil’s economy for the first time in history (Baer and Villela 1973, 227). Between 1933 and 1939, the annual industrial growth rate was 11.2 percent (Hilton 1975, 757). Furthermore, by 1938 Brazil had nearly achieved self-sufficiency in light manufactures (import substitution). This is reflected in the fact that industrial raw materials, fuels, and machinery constituted over 90 percent of imports during 1935-1937 (Hilton 1975, 761). The import of these capital goods would also diminish rapidly, and by the late 1940’s Brazil would be producing well over half its equipment needs (Leff 1969, 474).

Moreover, structural changes in this period encompassed the use of labor and technology in agriculture, both of which contributed to the massive rural exodus and the formation of urban slums. Firstly, labor relations changed drastically. Landowners decided to bring the colono system⁵ to an end. They progressively rolled back usufruct rights, and opted for cash wage systems instead. This was partly because the colono system itself became increasingly uneconomic with the introduction of new varieties of coffee plants, and the realization that planting subsistence crops in between rows of coffee bushes hindered productivity (Martins 2002, 313). The mechanization of agriculture and the introduction of chemical inputs further complemented the switch towards wage salaries. The use of tractors, which grew from 1,706 units in 1920, to 156,529 by 1970 (Stitzlein 1974, 39), and herbicides, meant that agricultural production became increasingly fragmented between tasks that still required manual labor, and tasks that did not anymore (Martins 2002, 315). These changes turned agricultural labor into a seasonal, rather than year-round activity. The wage system, therefore, became the most efficient system for capital accumulation; it allowed landowners to use workers when needed, and dispose of them when not.

As part of the structural changes of the epoch, landowners systematically evicted peasants from the land. This catastrophic situation, in which millions of women and men lost their ability to subsist, had a deep impact on urbanization patterns and rural migration. A great number of the dispossessed flocked into Brazil’s major cities in hopes of finding jobs in the burgeoning industrial sector. Consequently, the percentage of urban population jumped from 15 percent in 1940 to more than 50 percent in 1970 (Wagner and Ward 1980, 249). Unfortunately, the numbers of jobs in the formal economy, partly due to the technical modernization of Brazilian industry, was limited in comparison with the influx of migrants. The great majority of the newly arrived was relegated to the informal economy,⁶ where working conditions were poor, jobs were insecure, and wages were low. For the most part, migrants were denied access to health, education, housing and jobs. They had no other choice but to congregate in the peripheries of the city and build shacks as a last recourse for survival (Pino 1996, 436). The growth of favelas⁷ in Brazil, with all of its dehumanizing implications,⁸ would only get worse with the decades. In Rio de Janeiro, the numbers of favelas would swell from 7 percent (160 thousand) of Rio’s total population in 1950, to 18 percent (over 1.1 million) in the year 2000 (Perlman 2006, 158). It is also important to point out that Vargas fully endorsed and facilitated the establishment of these settlements. The government passively looked the other way as the landless built their shacks, and even actively extended railroad transportation to the poor areas (Pino 1996, 436).

Vargas’ administration marked a stark shift in the economic orientation of Brazil. More crucially, labor, whose scarcity was once a chronic problem for the landowners, became redundant. This changing condition for capital accumulation created massive levels of social exclusion. The ensuing social upheaval is the manifestation of one of the most fundamental contradictions in capitalism. The lack of resolution of this contradiction—i.e. increasing human misery and economic growth—would become the most central issue in Brazilian society thereafter. The cruel disposal of countless human lives, presided over by those who owned the means of production and by extension the state apparatus, would not go unchallenged. Dispossessed peasants organized themselves into Peasant Leagues (Ligas Camponˆesas). Together with the Maoist branch of the Communist Party of Brazil⁹ and the Catholic Church, they demanded a radical agrarian reform program (Juli˜ao 1972; Hewitt 1969; Stepan 1973; Welch 1995). As we shall see, the reactionary countermovement to the popular uprising was swift and brutal.

⁴ For a review of the role of agriculture in industrial development, see Johnston and Mellor (1961). For case studies of the contribution of agriculture to general economic growth, see Wilber (1969); Macrae (1971); Ohkawa and Rosovsky (1960).

⁵ The colonato system generally consisted on year-long contracts, and the colonos were required to perform three main kinds of agricultural tasks. The first was the cultivation of coffee plants, which involved the general task of taking care of the plants, including keeping the plantation weed-free. This entailed two or three weedings annually. The second task consisted of harvesting the coffee, which was usually done between May and July. The third task was to provide the landowner with several days of unpaid work per year. This included jobs such as clearing pasture, cleaning and maintaining paths and roads, fixing fences, and putting out fires (Martins 2002, 305; Brannstrom 2000, 330). In exchange for this work, colonos had three sources of income. They received a monthly wage according to the number of coffee trees they were responsible for maintaining. They were also paid a certain amount per sack of coffee harvested. Lastly, colonos had limited usufruct rights. This allowed them to plant subsistence crops - such as corn, beans and even rice - between the rows of coffee bushes, as well as in the small plot of land within the landowner’s estate where they lived (Brannstrom 2000, 330; Martins 2002, 306).

⁶ For a discussion of the role of informal sector economies in Latin America, see Soto (1989).

⁷ For a literature on Brazilian favelas, see Perlman (2006); Pino (1997); Pino (1996); Wagner and Ward (1980). For a debate about slums across historical and geographical expanses, see Davis (2007); “United Nations Human Settlements Programme” (2003); Clinard (1970).

⁸ “In 1970 only 36.9 percent of Brazil’s urban households had gas service, 42.8 percent had sewerage links and 53.2 percent had water. Malnutrition in urban areas is prevalent. A study of migrants living in Fortaleza in 1976 indicated that 68 percent of the urban migrants suffered from caloric deficiencies” (Wagner and Ward 1980, 256).

⁹ There were two branches of the Communist Party in Brazil at the time; one was Maoist, the other pro-Moscow. For the “Maoist Communist Party of Brazil (Partido Communista do Brasil, or PC do B) . . . the struggle in the countryside would be spearheaded by dispossessed peasants for land, and not by landless agricultural workers exploited through the wage relation. The pro-Moscow Brazilian Communist Party (Partido Communista Brasileiro, or PCB) took the opposite view, and argued that the struggle would be a peaceful one, involving the implementation of existing rural labour legislation recognizing the claims of both colonos and permanent labourers not as peasants with rights to land but rather as agricultural workers with rights to a decent wage, reduced working hours, and improved working conditions. In short, groups with a shared political outlook were fighting for different policy objectives (land reform; improvements in pay and conditions) on the basis of socio-economic identities that were equally distinct (peasants; agricultural wage labourers)” (Martins 2002, 318).