Impact of Socioeconomic Development on Regime Stability in Brazil: 1964 Transition from Democratic Regime to Military Dictatorship

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in Brazil

1964 Transition from Democratic Regime to Military Dictatorship

Felipe Bianchi Student Number: S2620189

Master’s Thesis

MSc. Public Administration – International and European Governance Faculty of Governance and Global Affairs

Leiden University The Hague, The Netherlands

Supervisor: Dr. K. Suzuki Words: 18809

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Abstract

The current state of existing research shows strong empirical evidence for the influence of the socioeconomic development of a country and its society on the stability of its regime. Nevertheless, previous research so far has examined the two aspects of development – social as well as economic – separately and has not developed an all-encompassing theoretical model that could explain the entirety of the underlying mechanisms. This research contributes to the state of the research by filling this gap and enquiring how socioeconomic development affects regime stability. The study focuses mainly on the developing and testing of hypotheses concerning the causal chain of societal and governmental reactions towards the socioeconomic development of a country. Therefore, it takes the unique case of the fall of Brazilian democracy in 1964 as its unit of analysis. Research suggests causal symptomatology of a low socioeconomic development and regime destabilisation that links it to the governmental ability to adapt to the cultural and institutional environment at stake. Especially for the coups d'état to occur, a vicious circle of series of economic declines and varying governmental answers to tackle the former in a short period, leading to an insurmountable entrenchment between the political camps, had to arise. The present research on this topic built and developed on previous research presents a triangulation, hence a combined theoretical framework taking the former causal conditions as central for a regime instability to occur and moves outside the generally presented conclusion of political science on the case of the regime transition in Brazil.

Keywords

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List of Acronyms

AEB - Anuário Estatístico Brasileiro

BNDES - Banco Nacional do Desenvolvimento Econômico e Social

FUNAG - Fundação Alexandre de Gusmão

IBGE - Instituto Brasileiro de Geografia e Estatística

IPEA - Instituto de Pesquisa Econômica Applicada

JFK - John F. Kennedy

LBJ - Lyndon B. Johnson

SUDENE - Superintendência de Desenvolvimento do Nordeste

SUMOC - Superinterdência da Moeda e do Crédito

Parties:

PCB - Partido Comunista Brasileiro

PSD - Partido Social Democratico

PSP - Partido Social Popular

PTB - Partido Trabalhista Brasileiro

PTN - Partido Trabalhista Nacional

UDN - União Democratica Nacional

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1. Introduction

Since the German Historical School of Economics, with Max Weber as its figurehead and the post-war school of Seymour Martin Lipset in the 1950s, political science has been concerned with the question of the prerequisites for stable regimes. Scholars of this school have concluded that the stability of regimes is affected by cultural and institutional conditions that are the outcome of socioeconomic development (Griffith et al., 1956; Lipset, 1959; Schumpeter, 2010; Weber, 1946). This view remains vital in contemporary research, as strong empirical and statistical evidence has identified a strong correlation between the level of socioeconomic development and the likelihood for regime destabilisation to occur (Goldstone et al., 2010; Grimm & Leininger, 2012; Sheafer & Shenhav, 2012; Tomini & Wagemann, 2018). In this sense, scholarship has suggested a causal relationship between the level of socioeconomic development a country experiences and its effect on cultural and institutional evolution and, in turn, its impact on the stability of a regime.

However, an explanation of the chain of causation remains to be composed. The present explanation is relatively limited, given its simplification of the dynamics of the processes at play (Tomini & Wagemann, 2018:712). Following examinations of the variables of the causal chain from previous studies, which theorised causality of the destabilisation of regimes using different units of analysis, the explanations attain more strength when the various causes are combined into one overarching mechanism.

The most prevalent mechanism, based on the historical school, explains a positive (and likewise negative) relationship between the variables ‘socioeconomic development’ and ‘regime stability’ by highlighting their reciprocal interference and the role of society and institutions as intermediaries (Griffith et al., 1956; Lipset, 1959; Piketty, 2013; Schumpeter, 2010; Wallerstein, 1980; Weber, 1946). Furthermore, this school argues that economic development stimulates the emergence of new classes that produce divergent values in society. Hence, the extent to which a regime remains stable depends upon the effectiveness of its ability to respond and adapt to societal preferences.

The contemporary school, in contrast, picks up the debility of the historical school to analyse the internal and external factors shaping regimes (Goldstone et al., 2010). Contemporary-school analysis is based on a three-stage time horizon where the interplay of government and citizens is affected by three socioeconomic conditions: international exchange, in time, affecting stability and, in some cases, the transition of a regime, which produces further instability. Additionally, the contemporary school highlights the impact of the regime’s

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characteristics on its durability under the same conditions presented above. The logic is that depending on the firmness of a government (democracies to successfully mediate between actors or autocracies to successfully suppress movements), a country experiences more instability when a regime is characterised as a semi-form (neither fully democratic nor fully autocratic).

Although the level of socioeconomic development plays a statistically proven role in modifying culture and institutions and consequently regime destabilisation, it remains unclear how these features of the causal mechanism operate within one framework. Indeed, context is an essential determinant for unravelling the causal process of the internal and external factors at play. However, until now, no contemporary scholarship has empirically assembled the puzzle of theoretical frameworks, offering an encompassing explanation for regime destabilisation to occur (Tomini & Wagemann, 2018:712).

This study contributes to the completion of an overall theoretical framework with the goal of answering the research question of how socioeconomic development affects regime stability. A critical moment in Brazilian history that has not yet been analysed under these theoretical conditions is assessed: the fall of its democracy in 1964 and the beginning of 21years of military dictatorship. Central to this research is developing and testing hypotheses about the causal mechanism of how culture and institutions are affected by and react to the dynamics of socioeconomic change.

A process-tracing method is used in a narrative form that attempts to reconstruct and sufficiently provide an answer to the causal dynamical mechanism of socioeconomic evolution and its effect on the regime stability of a Latin American country (i.e., democratic breakdown). This research hypothesises that both institutional and cultural evolution is initiated by socioeconomic evolution, which in the long run challenges the stability of the regime at stake. The responsiveness and adaptability of the regime towards the preferences of the actors in the policy arena is vital. The condition of a regime is also crucial, affecting decisions over its durability, that is, whether a current regime should continue or transition. Historical and modern scholarship on the subject is incomplete. This research aims to fill this gap, providing an explanation for the case of Brazil through a deductive method.

The coup of 1964 can be characterised as the accumulation of societal and developmental economic divergences since the establishment of Brazilian democracy in 1946 (see i.e.: Green et al., 2018; Tomini & Wagemann, 2018). Initiated and performed by the military, the coup was influenced by the differing preferences of the actors in the policy arena (McCann, 1980; Stepan, 2015). The conservative and prosperous elite and the military were on

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one side, and the leftist working and impecunious rural class were on the other. The democratic regime was unable to counter these developments (see Tables 7-9). Although the government’s financial packages attempted to realise the Brazilian motto of Ordem e Progresso (order and progress) and were determined to stimulate and equalise Brazilian socioeconomic development,

the regime could not stop the chain of causality (Presidência da República, 2011). Constant

switches in presidents with associated changes in the form of the economy, as well as the growing emergence of social unrest, led the country into a socioeconomic crisis. Differing from other research, this case examines mounting pressures, such as unprecedented migratory movements, that evoked a military intervention. Previous research simply ascribed the reason for the end of Brazilian democracy only to economic reasons, à la Lipset, without further analysing societal or institutional components within these processes (Wallerstein, 1980).

Moreover, considering that Brazil experienced several regime destabilisations and transitions in previous decades, this analysis highlights the multichain relationship between socioeconomic aspects and regimes. Furthermore, this study considers societal and institutional receptivity in the case of the military coup in 1964, which is distinctive in Brazilian history. This case chiefly details the obstacles government and society faced in confronting socioeconomic decline in light of attempted and implemented manoeuvres to tackle the crises that were precursors to the coup.

The uniqueness of this case and reason for its selection is because key institutional and societal processes leading to the end of the democracy are well-documented. These sources yield a richness of supporting insights for the analysis of this case. Access to prior data, such as government reports, programmes and proposals, as well as statistical and general institutional data stored in government archives, is facilitated via online accessible governmental archives

such as the Instituto Brasileiro de Geografia e Estatística (IBGE) (Brazilian Institute of

Geography and Statistics), the Banco Central do Brazil, the Tribunal Superior Eleitoral (Superior Electoral Court); the Câmara dos Deputados (Chamber of Deputies); the Ministério da Economia (Federal Ministry of Economics); the Presidência da República (Presidency of the Republic); the BNDES – Banco Nacional do Desenvolvimento Econômico e Social (National bank for Economic and Social Development); the IPEA - Instituto de Pesquisa Econômica Applicada (Institute of Applied Economic Research) and the FUNAG – Fundação Alexandre de Gusmão.

In addition to primary data, secondary data is applied, such as survey data provided and categorised by research and governmental agencies, including the Brazilian Development Bank (BNDES). The use of multiple data sources helps prevent selection bias through the

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triangulation of a comprehensive and diverse data set. The structure of this research is as follows. The thesis begins with a review of the literature on the topic of socioeconomic development, highlighting the need for a triangulation of theories to sufficiently embrace the mechanisms at play. Furthermore, this section evolves the central argument of the combined historical and modern research, indicating a causal chain rooted in socioeconomic development affecting institutional and societal reactions leading to regime stabilisations or destabilisations. Subsequently, the study specifies the research design, data collection and operationalisation, providing extensive justification for the selection of the case of the transition from democracy to military dictatorship, as well as a specification of the limits arising from this case. The operationalisation section examines both statistical and empirical evidence, providing information concerning the localisation of the data used. In the following part, a concise introduction to Brazilian democracy before the military coup under institutional, economic and societal terms, is presented along a timeframe of the years 1946–1964 to highlight the key factors critical to this case. Afterwards, the research constructs an empirical narrative by analysing the triangulated theoretical frameworks with historical evidence. Finally, the research presents the results of the analysis and provides a conclusion.

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2. Theoretical Framework

2.1 Current State of the Art

Socioeconomic Development. Vital for any political regime is to maintain stability and remain unaffected by destabilising internal and external factors. Accordingly, ever since the Lipset school, a growing body of literature has investigated the causes of regime destabilisation and its underlying causal mechanisms.

The basis of this academic premise is that socioeconomic development has a significant influence on the stability of a regime, assuming it to be the key driver for shifts in the form of government to occur (Lipset, 1959). The Lipset school focused on two principal characteristics of societal systems representing rather complex problems; the socioeconomic development of a country and the degree of legitimacy the leading government enjoys (Lipset, 1959:71). Following this argument, the form of government closely relates to the degree and stage of economic development of a country. Thus, the better developed a country in economic aspects, the greater the likelihood for a democratic form of government to emerge or the more stable a democracy. In contrast, the less developed a country, the more likely an autocratic form of government to emerge, and the more stable the autocracy. Generally, the theory assumes that a certain degree of increase for both wealth and education is required, for political movements aiming for a political amendment, to arise, that in turn might challenge the stability of a regime (Griffith et al., 1956; Lipset, 1959).1

Arguably, economic development is closely connected to societal issues such as the political culture at stake, and the link between civil society and the state, that in association to the economic prosperity of a nation, evolutes and influences the form of government. The more prosperous the economy, the likelier the rise in the education level, and the turn into a more democratic form of political culture. The former goes along a societal or class reform, as an emerging middle class aims for more political participation. Research pinpoints to a suction effect that initiates migratory movements, hence stimulating urbanisation, which in turn disorders the societal structure at stake. Following this logic, former leading classes, such as the aristocracy or bourgeoisie, were increasingly challenged in their initial position by emancipatory movements of the lower classes. Central to this logic is the impact of

1_{Note that an increase in economic well-being is a necessary condition for movements to arise. Also, the case of an}

economic decrease might stimulate the volume of a political crisis (see Griffith, et al., 1956; Lipset, 1959; Nielsen, 2016, Weber, 1994).

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socioeconomic development chiefly on the middle and lower classes, as for them an increase or betterment in essential factors, such as their income level or the overall education rate, is larger than for better-established classes.2_{Essential at this point are studies finding that lower} classes (characterised by workers, staff and undereducated citizens) tend to favour more extremist parties due to their underprivileged circumstances. The emerging middle class, in contrast, acts as a moderate, democracy-favouring and promoting group (Lipset, 1959, Van Keersbergen & Vis, 2014:75). Thus, aristocracy and bourgeoisie summed up as the group of elites represent a more non-democracy-promoting or favouring class. In his research, Bermeo (2003) highlighted the importance of elites and their preferences, as well as their nexus with the political regime at stake, crucially affecting the stability of a regime. Researchers such as Brooker (2000) present evidence that the likelihood for autocratic regimes to emerge is higher if an authoritarian culture is or was present in the respective country. Hence, the role of elites and their preferences for or against a democratic process and their cultural linkages is not to underestimate key drivers in explaining regime instabilities. Likewise, the progressive involvement of civil society, hence the degree of politicisation, emerging through socioeconomic development and welfare, is another determinant for regime transitions. However, this process requires a substantial length of time, on average (Tilly, 2007). History reveals plenty of evidence that the formerly described class restructuring promotes the emergence of civil society, as shown by voluntary organisations, reinforcing the relationship between citizens and the political class.3

Capitalism. The original assumption of Lipset included the conditions of capitalism for democratic development in his research, which was first developed by Max Weber (Weber, 1994:19). Weber concluded that capitalism and democracy were elements concentrating into a unique self-reinforcing complex (Nielsen, 2016). The rudimentary explanation was that capitalism led to economic development, which consequently stimulated the emergence of the mental, as well as the means of the foundation of modern men. The result was the rise of the self-established class of the Burghers (in German: Bürger) as the first form of a middle class advocating for its emancipatory participation in politics (Lipset, 1959:85; Schumpeter, 2010:110). Entrepreneurialism, together with the rules of Protestantism, emphasised the responsibility of the individual and focused on austere living standards establishing the

2_{In 1789 France, the drastically imbalanced socioeconomic discrepancy among the first and second classes, standing with the}

third, led to the rise of a revolution destabilising and ending the thousand-year-old monarchy (Lüthy, 1955; Sée, 1950).

3_{The so-called Vereinsgründungen in Germany of the 19th century and emerging industrialisation were preconditions for the}

later establishment of political parties enabling the political participation of the lower and middle classes at the end of the century. This scenario led to the first German Republic in 1918, in consequence of a drastic deterioration in socioeconomic matters after World War I (Hein in Gall, 1993; Hoffmann, 2003).

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foundation of a continuous rise in the socioeconomic conditions as well as of modern democracy (Barbalet, 2008; Lipset, 1959:85; Nielsen, 2016; Schumpeter, 2010:111).4

Nevertheless, Weber concluded that differences in the rise of any form of government strongly depend on important historical events leading to a different set of outcomes. Hence a range of Anglo-Protestant countries required no revolution, whereas for other countries revolutions have been a precondition to overthrow an undemocratic form of government (Lipset, 1959:72). Additionally, Weber assumed specific aspects to be central issues to maintaining the democratic form intact, such as capitalism. However, for capitalism to exist, following his definition, it requires as a precondition that property is privately owned, and maximisable by its owners.

Works of Adam Smith and David Ricardo concluded that if goods and services are characterised as property, their maximisation required the division of labour and the reduction of trade limitations, hence a widening of the market and the establishment of a jurisdictional frame for the owners. The larger the market, the more exchange, the higher the level of production. That is, the higher the economic growth, the more people are concerned with the protection of their property, and the more they aim for political involvement (Barbalet, 2008; Ruffin, 2002). History has shown that through the introduction of modern capitalism and the degradation of trade barriers, the industrial revolution was encouraged. The former resulted in the long run in an overall increase of GDP, namely to an increase in the economic evolution of the countries in the northern hemisphere, but also to the establishment of constitutions granting its citizens increasing participation in politics (Lipset, 1959; Piketty, 2013). In sum, this continuous interaction between the participants of the market and its institutions in a capitalist surrounding, produced in a coordination process new regime.

Nevertheless, the theoretical framework of this school remains to explain how internal and external factors affect the preferences of the actors involved. The quasi-alike evolutionary characterisation à la Darwin, presented by this school, requires the inclusion of institutional and societal factors to sufficiently explain the influence of modern capitalism and the high degree of network complexity and its effect on regime stability or destabilisation (Tomini & Wagemann, 2018; Witt, 1987).

The role of conflicts. Contemporary research following Lipset’s theory (see Grimm & Leininger, 2012) focused on intrinsic and extrinsic factors shaping the influence of conflicting objectives in the context of the assumption that socioeconomic development had a direct 4_{The most famous example of self-ruling Burgher states are the cities of the Hanse that established the first form of a}

globalised trade network. A first network of free republican cities surrounded by monarchic regimes promoted an alternative form of government. It is no coincidence that most of the revolutions found their point of origin in cities of free Burghers.

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influence on the prioritisation of the actors in the political arena that affected regime firmness (Grimm & Leininger, 2012:400; Lipset, 1959:103). According to the literature, intrinsic factors refer to conflicting democratic objectives with one another, such as the degree of free and fair elections vs the negotiation of power-sharing. In contrast, extrinsic factors refer to conflicting objectives of political regimes with other influential policy goals, such as a regime’s and society’s democratisation vs the increase of social or economic development. For instance, governments might prioritise economic development over improving the democratic integration of its citizens.

Crucial for the emergence of conflicts is the degree of development a country has enjoyed so far. The research assumes that in the case of rising socioeconomic discrepancies between the classes, it is likelier for the prospering group to vote for a respective political supporter and promote democratic forms of government because both intrinsic and extrinsic goals are met. In contrast, for underdeveloped and less-flourishing classes, the idea of an alternative form of democracy that promises improvements – here intrinsic and extrinsic factors are not met by the government (see election divergences) – becomes more appealing (Lipset, 1959; Schumpeter, 2010). Hence, the degree of (a) conflict within a country, (b) development a country has enjoyed so far and (c) response of a political regime towards a conflict, under socioeconomic and political pressures, as well as matters of the prioritisation of the actors, all play a vital role in the durability of the political landscape (Grimm & Leininger, 2012:403).

Figure 1: Relationship observed.

Regime Stability. Following the definition of researchers such as Hurwitz (1973) and Kaufmann et al. (2009), regime stability is defined as the capability of a regime to respond efficiently towards emerging internal and external factors threatening their authority solidity; or as the likelihood that a regime is destabilised or ended through revolutionary or military actions.

Thus, research focused on two major hypotheses to explore the reasoning for stable and unstable regimes, under the premise of socioeconomic influence. The first assumption of the research is that (I) political stability is affected by institutional coherence (Sheafer & Shenhav, 2012:233-34; Kahneman & Tversky, 1979). The logic is that the stability of any regime is affected by the degree of consistency and legitimacy an institution enjoys concerning the

Conflicts in a country The degree of development The regime at stake

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emergence of a crisis and opposition in consequence of the governmental adaptability and responsiveness towards these issues (Gates et al., 2006:907). Goldstone et al. (2010) visualised their findings in a U-shaped structure where each end represents either a democracy or an autocracy. The researchers took as their reference point, overlapping events occurring within a country, but also the durability or longevity of a regime, to demonstrate (through sequencing) the complexity of political stability or instability (Goldstone et al., 2010:192). Following their logic, (a) a democratic regime is capable of adjustment and of preventing conflict, whereas (b) an autocratic regime represses conflict between the government and the people, and both regime styles, despite their form, are equally successful in establishing their authority. The (c) semi-form of either a democracy or an autocracy, represented in an overall u-shape, is confronted with only partial repression (autocracies); or with governments being unable to adjust policies to the will of the people (democracies). Accordingly, the lack of a legitimised Hobbes’ Leviathan as a central, all-encompassing institution, centralising the power structure in one government or person, is missing, resulting in an imbalance of the stately legitimacy (Hobbes et al., 1651/2005). Further risk of political instability is additionally given in the transition stage of one government type to another (Epstein et al., 2006). Additionally, the literature focused on critical determinants such as the durability of regimes or the number of regime changes lead to the regime destabilisations, to make the u-shape framework more feasible.

This research includes the u-shape framework, established by Goldstone et al. (2010), yet applies its own (yet extended) theoretical assumption to visualise the proposed obstacle (see Graph 1). The x-axis represents the form of government, whereas y represents the degree of stability a government enjoys, hence if x = 1 and y = 1 a democracy enjoys the full authority, if x = −1 and y = −1 an autocracy enjoys full authority. The overall u-shape represents a semi-form of either a democracy or an autocracy. According to the literature, ‘political stability is anchored in institutional consistency’ (Gates et al., 2006:907). The estimation of a government’s legitimacy depends solely on the degree of assertiveness it possesses; this research uses electoral data and its respective outcome, and the number of coups, hence the number of regimes and their durations, and the domestic conflict rate to explain whether the democratic form of government was characterisable as stable, thus as a fully democratic regime, or as a semi regime.

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Graph 1: U-Shape Curve.

The (II) assumption is concerned with the impact of the culture or the ‘cultural congruence’ on regime stability (Shaefer & Shenav, 2012:235). Almost six decades ago, Almond and Verba first introduced the concept of ‘cultural congruence’ as an influencing component of politics. Ever since, literature highlighted an evident correlation between the prevalent cultural landscape of society and the permanence of a regime (Ingelhart & Baker, 2000; Shaefer & Shenav, 2012:235). Although the theoretical basis foresaw a political orientation to precisely shape a regimes durability, modern literature extended the horizon towards emancipatory values or the index of freedom, as well as the degree to which citizens are willing and able to assert their orientations (Shaefer & Shenav, 2012; Welzel, 2013; Welzel & Dalton, 2014). The research allocates the concept of emancipation in the empowerment process of humankind. As such, citizens becoming commanders of themselves, strive for more liberty and democratic values. Citizens show a greater affinity to challenge prevalent hierarchy systems and show greater empathy to contribute to a harmonisation of the political culture at stake if the socioeconomic conditions improve. In short, the degree of politicisation or the degree to which citizens are politicised depends on the socioeconomic development of a country and the ability of a regime to confront or adapt to the former. Analogously, undemocratic systems, are increasingly challenged by endogenous processes, affecting the evolution of politics, society and economics (Goldstone et al., 2010; Shaefer & Shenav, 2012; Wejnert, 2014). 0 0,2 0,4 0,6 0,8 1 1,2 -1,5 -1 -0,5 0 0,5 1 1,5

U-CURVE

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The diffusion of the value orientation is characterised, by researchers such as Tomini and Wagemann (2018) or Rochon (1998:10), as a two-speed process; first, as an explosive and quickly devolving process through revolutions or social unrest; and second, as a deliberate process over generations. However, for diffusion to occur a process of cultural innovation initiating a societal evolutionary process making democratic processes possible is required. Hence, for democratic values to emerge, citizens require an increase in communication technologies to facilitate the exchange of information, yet this presupposes an increase in economy and education. In this sense, the population has to experience development in their socioeconomic well-being first to develop new political interests and secondly have ways to communicate with like-minded to create a movement (see Deutsch & Welzel, 2016). The underlying assumption is the necessity of a government to be legitimised or seen as legitimate to enjoy authority fully, but also to be consistent with the value set of its citizens to realise the former (Inglehart & Baker, 2000:186).

Taking the former in respect to the u-shape structure proposed in assumption (I), democracies that lack efficient and necessary democratic participation or autocracies unable to prevent reforms, or to open themselves for the latter, promote the indirect destabilisation of their authority.

In addition to assumptions (I) and (II), Tomini and Wagemann (2018:709) developed a chart that characterises regime destabilisation as either opposition- or crisis-based.

Table 1: Forms of Threats (Tomini & Wagemann, 2018:709).

Central to understanding the rationale is the distinction between internal and external threats that shape the outcome of the destabilisation. Internal threats refer to destabilisation caused by governmental reactions towards the emergence of opposition in a crisis. Important here, as described above, is the strength and adaptability of a government to find a suitable answer to conflicting objectives. Depending on the solution presented, the government either solves a crisis and disempowers an opposition or strengthens both the opposition and the crisis. A different, external threat refers to regime destabilisation caused by a disloyal opposition attempting to gain power through a coup d'état or a military intervention in a crisis against an

Opposion Crisis

Forms of Threat Basis of Threat

Internal External

Government reaction towards crisis Government reaction towards

opposition Disloyal Opposition Military intervention against inept

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inept government (Tomini & Wagemann, 2018). According to both historical and contemporary research, the likelihood for the simultaneous emergence of both external and internal threats is possible but unproven (see Lipset, 1959; Tomini & Wagemann, 2018).

However, in respect to the debate concerned with regime destabilisations, apart from Lipset’s school, theorists such as Levitsky and Ziblatt (2018) concluded a reversed causal assumption, taking democracy as a necessary condition for economic development, hence as an indicator for regime stability. Although both authors, similar to Lipset, assume a divergence in the emergence and durability of regimes along the northern and southern hemisphere, they differ in their reasoning. The opposing school presumes a causal connection between the resource richness or poorness of a country, hence the necessity to produce wealth, and the stability of a regime. In this logic, countries of the northern hemisphere have tended to stand for more stable democracies in the past, whereas countries of the southern hemisphere stood for more unstable democracies. In their latest work, they have extended the former by the firmness of the constitutions at play, which overarches the Lipsian and contemporary school, assuming the constitutional framework to be a necessary component of regime destabilisation. Nevertheless, this contemporary school fails to highlight the significant influence of the social, economic or cultural interplay within the regime destabilisation processes. In comparison, Lipset and his school depicted the socio-philosophical foundation of the German Historical School of Economics, which detected a causal relationship between the socioeconomic evolution and its irretrievable effect on society and institutions affecting regime stability (Levitsky & Ziblatt, 2018; Nielsen, 2016; Weber, 1994:19).

Table 2: Theoretical mechanisms presented and proposed in the literature explaining regime destabilisation as a causal mechanism of three components.

Altogether the body of literature on regime stability assumes that the socioeconomic development, including its evolutionary effect on social and institutional aspects, is the variable

Social

Depending on the enjoyed degree of development and the social standing, emergence of opposition or support for

the regime at stake.

Mechanism Explanation

Socio-Economic Development Affect on the evolution of society and institutions

Governmental

Institutional coherence and cultural congruence

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most significantly correlated to regime stabilisation or destabilisation. Nevertheless, research has only presented evidence separately, excluding either economic or social developmental factors that shape regime stability. The literature has not empirically elaborated the proposed composition of both the historical and the contemporary theoretical puzzle (Grimm & Leininger, 2012:409; Tomini & Wagemann, 2018:712). The next paragraph develops an extensive argument for the approach to account for this omission.

2.2 Contribution to the current Level of Knowledge

The core of this research assumes a socioeconomic impact on regime stability, that is, an explanation for institutional change conditioned by societal and economic facets. To extend the state-of-the-art science, the research on institutional change and regime stability might benefit significantly from a theory triangulation. This triangulation combines Lipset’s findings with theories of the modern school concerned with internal as well as external factors at the macro level, creating a broader picture and providing more evidence to support Lipset’s conclusions. This multi-facet framework offers a comprehensive explanation of the interplay of a multitude of institutional, economic and civil society actors in the context of regime stability and destabilisation. Previous literature concerned with proving Lipset’s findings focused more on democratic promotion without explicitly including a general aspect of regime destabilisation and regime transitions.

Why is it more likely for one country to have a more stable form of government, whereas another country such as Brazil faced a series of unstable regimes? Arguably, this phenomenon roots in (1) the divergence in socioeconomic developments, (2) different reactions of governments towards the influence of socioeconomic evolution on its economy, society and politics, and (3) institutional coherence and cultural congruence at stake, which develops differently in each country, stimulating the proposed causal chain (de-)stabilising regimes.

It is most apparent that in connection to the aforementioned extensions of Lipset’s theory, a more vital linkage between regime shifts that are initiated by socioeconomic matters is at play. In this sense, research indicating a change in economic matters has its focal point on determinants such as GDP development, inflation rate and growth rates of sectorial production, as well as the number of government interventions in the market and the implications this had on the economy. Nevertheless, focusing on the development of an economy requires more than the number of telephones or the degree of urbanisation to estimate socioeconomic development and discrepancies in a country. Arguably, growth rates such as education, literacy, income or

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the violence rate, and evidence concerned with the electoral evolution create a more comprehensive picture (see Piketty, 2013). Piketty argues that growth rates of at least 1% are vital for societal change to arise; consequently, societies not experiencing such a growth rate (or less than 1%) as prevailing conditions remain almost the same (Piketty, 2013:133-34).

The present study attempts to close the theoretical gap and combine past research on societal and economic development with research focused on institutional studies to find a reasonable answer for regimes shifts. Past academic literature failed to present concluding reasoning for Brazil to experience this vicious circle of changing regimes, the turn from democracies towards autocracies and vice-versa. Research on Brazil either explained the socioeconomic discrepancies in the classes or attempted to explain the end of the Brazilian democracy in 1964 via a reduction to pure economic reasoning, excluding socioeconomic factors central for the macro explanation of the causal mechanism. Consequently, previous schools on this topic provided a rather vague argumentation that required a stronger focus on both social as well as economic aspects to explain the ongoings in Brazilian politics, especially from 1946–1964 that this research takes as its core. Particularly with the Brazilian case, this research attempts to (1) instrumentalise the formerly established combination of theories to provide a sustainable explanation for Brazilian politics and its instability in regimes (see 2.1), and (2) improve and to amplify the current assumptions of research taking socioeconomic development and its effect on society and institutions into a reciprocal causal chain as a precondition for regime stability or destabilisation to occur. Similar to previous research, this study analyses these processes in a short time horizon to estimate the real development of a regime under the assumed causal chain of socioeconomic development and its influence on society and institutions. Therefore, the examination of real growth rates and social evolutions that differ from analysis over a long time horizon better explain regime shifts.

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3. Research Design

3.1 Process Tracing

This research investigates how the independent variable socioeconomic development contributes to the outcome of regime stability or destabilisation by deliberately selecting the fall of Brazilian democracy in 1964 – in this case the understanding of the causal contribution of socioeconomic development to the military coup, hence the regime destabilisation.

To fulfil this investigative analysis, this research follows an explanatory outcome case-centric process-tracing design (Beach & Pedersen, 2013; Beach & Pedersen, n.d.:7-9). The design purposefully aims to present a convincing explanation for a multichain-caused outcome in a context-specific case (Beach & Pedersen, 2013; Toskhov, 2016). Respectively, the research starts with hypothetically deductive theory testing to extract plausible causal chains that might explain the outcome in our case regime destabilisation; followed by the establishment of hypotheses and the exploration of evidence to test and falsify the former. In the following second part, the research utilises an inductive approach of quasi theory building – in this case, the completion of theory puzzles to one general theory – exploring empirical as well as statistical evidence for a narrative building and concludes the existence of a causal chain. It combines theories to confront the risk of minimal sufficiency, due to a singular theorised causal chain taking un-systematic mechanisms into account, in an iterative explanatory research design. Hence sufficiency is given, if no other aspects then those assumed by the theory, accounts for the outcome5_{(Beach & Pedersen, n.d.:9).}

In general, the period of Brazilian democracy since 1946 requires a periodisation, rather than a simple enumeration of events that characterised this period. The periodisation framework provides a sequential analysis of multiple facets to reproduce the correlation of economic, societal and political factors that explain the regime transition of a democratically elected government to a military autocracy. The former requires a fundamental analysis of the socioeconomic development and the governmental and societal reaction towards it. Consequently, it is crucial to analyse the preponderant processes that led to the coup in 1964 that ended the democracy. The narrative presented in this research is primarily focused on the cause and effect of socioeconomic development on regime stability, hence confronts causal inference by including different variables, such as cultural and institutional aspects into account to create a higher degree of robustness.

5_{This research understands causal chains as an interrelated mechanism requiring the collaboration of the}

individual components to produce an outcome, in our case – regime destabilisation. In the case that one component of the causal chain is missing, we expect a different outcome to arise.

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3.2 Case Selection

On 31 March 1964, the military under the lead of General Castelo Branco, undertook a coup d'état, ending the Brazilian Democracy of 1946 (Fausto, 2006; Folha de São Paulo. b., 1964). The first permanent military autocracy in Brazilian history was a coup resulting from several factors and involving multiple groups, including the institutional components of the leading parties, the Partido Trabalhista Brasileiro (PTB), the Partido Social Democratico (PSB), and the Partido União Democrático Nacional (UDN). Moreover, pressures included the rivalry between president and congress, the economic components of the governmental stimulus packages, such as the ‘Plano das Metas’, ‘Sudene’, the Alliance for Progress, the ‘Plano Trienal’, and the switches in the economic system, but also the social aspect of rising discrepancies among the classes, the first-ever mass migration in Brazilian history and the clash of elites, military and conservatives with the urban, as well as rural farmers and the working class. The coup and the military regime that followed influence Brazilian society and politics to this day.

The case of the fall of Brazilian democracy was selected as the central case for this research as it entails detailed and crucial information regarding the socioeconomic components that affect regime stability. Research on the Brazilian democracy before the coup provides a chance to explain the most prevalent mechanisms at stake that led to the end of a Western democracy in post-war times, allowing for the forecast of future developments in other democracies. It is perplexing that solely the military, yet no other institutional or societal actor, undertook the coup and established a permanent autocracy, although the military represented the guarantor of democracy in previous military interventions throughout the democracy since 1946 (Fausto, 2006; Green et al., 2018; McCann, 1980; Stepan, 2015). Additionally, this case might be comparable to other military coups d'état at first sight, yet the Brazilian case is unique, in both its history, as well as internationally, as the coup itself was in conformance with the constitution6_{. Given state-of-the-art literature that suggests socioeconomic development is the} core for explaining regime stability or instability, the case of Brazil’s regime transition in the 1960s best explains the causal chain at play between socioeconomic development and the institutional and societal reaction towards it. In sum, the exploration through the reconstruction of the end of Brazilian democracy and its causal mechanisms might reveal significant aspects overlooked so far by theory that until recently diagnosed solely economic causes as influencing

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the military coup. Individual cases, different from common cross-cases, provide an opportunity to highlight specific and unique mechanisms at stake (see Lipset, 1959).

This study takes the year of 1946 as the starting point, which was the year democracy was established and former President Eurico Gaspar Dutra introduced a liberal, open-market economy (Ayres & Fonseca, 2017). Nevertheless, this research particularly focuses on the period from 1950 onwards, as it was the year of former president Getúlio Vargas’ re-election as President of Brazil for the second time – although he was the leader of the Estado Novo,7_an autocracy inspired by the populist regimes of Europe, his regime ended with the constitution of 1946 establishing democracy – and the economic and societal implications that should influence the succeeding presidencies until 1964 (Levine, 1998). The day of the 1 April 1964, the finalisation of the coup d'état is where the research concludes its analysis. Considering prior and later military coups d'état, the degree of comparability is deficient, due to the uniqueness of the Brazilian case.8

The design of this analysis presents a typical weakness of single case studies, such as qualitative limitations, mainly due to the low degree of external validity. The applicability to similar, yet differentiating cases, is with low certitude, given the likelihood that the findings are context-dependent due to the single case framework (Toshkov, 2016:297-299). Nevertheless, the strength of this design lies within its high internal validity, due to a wide range of data, and the development of within-case inferences (Toshkov, 2016:301). As this case represents, one of the first to be analysed through the combination of the historic Lipset and modern school – based on the former – additional analyses on falls of democracies are required to extend theoretical generalisability (Toshkov, 2016:302).

3.3 Operationalisation

This research assumes a causal chain of mechanisms operating simultaneously on different levels of analysis, initiated by and rooted in socioeconomic development.

The evaluation of the prognosticated verification takes the probabilities of its occurrence as the base. That is, if an unlikely piece of evidence is detected, a more robust piece of inference could be advanced. To accomplish this, the research provides the likelihood of the assumed evidence a priori. Finally, testing the triangulated theoretical mechanism requires simultaneous

7_{Vargas’s Estado Novo was an autocratic regime formed upon the ideology of nationalism and socialism like Mussolini, that}

attempted to create an integrated, egalitarian society. Yet with exceptions as Vargas excluded 1934 the constitutional inclusion of an anti-racism clause, declaring all citizens as equal, permitting no privileges rooted in the background of the citizen (see Fausto, 2006; Levine, 1998).

8_{Considering different examples, the military was always seen as rival to the democratic regime, which was different in}

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analysis of whether the assumed theoretical causal chain matches the observed mechanisms at stake (Beach & Pedersen, 2013; Toskhov, 2016). Thus, the analysis focuses on detecting several pieces of evidence, confirming and even falsifying the predicted hypotheses to meet the conditions of thoroughly designed research (Toskhov, 2016:302).

Socioeconomic Development: This research immerses into the societal, economic and institutional contexts of the Democracy of 1946 that provoked the military coup of 1964. However, the thesis specifically attempts to answer whether the development in socioeconomic matters caused the coup.

Hypothesis 1 (H1): The fall of Brazilian democracy has been affected by a reciprocal causal chain of institutional and societal reaction and counter-reaction to socioeconomic development.

Given the high amount of presented empirical and statistical evidence in the literature, presuming a negative correlation between the societal, economic (and institutional) development and regime stability, it is very likely, that this research presents sufficient evidence to confirm that socioeconomic development in Brazil has affected the stability of the democratic regime. Respectively the probability of finding disapproving evidence is therefore low. Nevertheless, if this research finds challenging evidence, it is enough to question the theoretically assumed causal chain.

This research analyses in deep, the social, economic and institutional context to detect and reconstruct the causal mechanism at stake, to confront Lipset (1959) and Wallerstein’s (1980) assumption of solely economic effects as causes for the military coup, and to confirm the triangulated proposal of historic and modern scholarship, that a multi-cause chain affected the coup.

Hypothesis 2 (H2): Governmental interventions into the market affected the reciprocal causal chain.

In this case, the literature also provides enough empirical and statistical attestation to predict a high likelihood of evidence to support the reciprocal causal chain. The following cases if found, are assumed as evidence confirming H2; the increase of government debts to stimulate the market, the introduction of stimulus packages of the government, the change of an open-market economy towards a nation-centric economy, the switch vice-versa, the introduction of social market economy measures vs the introduction of neo-liberalist austerity measures. On

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the contrary, there is very unlikely to find evidence falsifying H2. Correspondingly, such evidence would entail different forms of capitalism in Brazil at the same time, hence a non-capitalist form of economy, such as a socialist economy; a governmental programme – here programme might include jurisdictional changes – opposing and/or limiting the classical capitalist economic framework of the free market and private ownership.

Institutional consistency and cultural congruence: In order to detect and test the proposition of an institutional and cultural effect on the reciprocal causal chain, the research examines Brazilian Democracy of 1946 to the extent to which governments experienced a lack of authority, hence a regime destabilisation due to institutional factors, but also due to the lack of congruence with the culture - political and economic preferences of the citizens – at stake. With this, the analysis aims to determine the role that institutional and cultural factors played for the military to intervene and end the democracy.

Hypothesis 3 (H3): Institutional consistency and cultural congruence of all presidencies were affected by the reciprocal causal chain of socioeconomic development and the institutional and societal reaction towards socioeconomic development.

The likelihood of finding evidence that would proof H3 is high given the evidence presented in the literature. Exemplifying a confirming piece of evidence would include a regime that experienced series of governmental disruptions, such as continually changing governments – in our case presidents – and military or societal interventions threatening a regime in its stability, or the low congruence of regimes towards the preferences of its citizens, affected by the causal chain. For instance, a democracy failing to provide fundamental rights for its citizens or an autocracy failing in keeping repression constant in consequence of socioeconomic decline. On the contrary, there is only a small likelihood that would disapprove with H3. Hence, such evidence would entail, no institutional or cultural affection by the reciprocal causal chain, therefore no effect of socioeconomic development on governments or society at all.

Worth noting is that this analysis is limited in the scope of a macro analysis of the actors in the policy arena. Hence the individual preferences missed to include by the government are excluded, macro phenomena such as migration processes or mass protests in consequence to a missing governmental answer are taken as reference points to verify or falsify H3.

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3.4 Data

Primary Sources. The primary data used in this research are available via governmental websites without further limitations. The IBGE, for instance, has stored every statistical record taken for Brazil ever since its establishment, such as all census published since 1946, facilitating an objective analysis of the socioeconomic development in Brazil, a crucial component of this research (Bowen, 2009). Additionally, IBGE includes data in a specific section concerned solely with the historical development of Brazil, offering further evidence for the analysis of this study. Overall, this research analysed each of the annually published censuses for relevant data, covering 24 years. IPEADATA, an additional governmental website, gives access to every governmental statistical published, facilitating further analysis of the economic development in Brazil.

Furthermore, this research examines additional statistical data published by federal states such as São Paulo that extend the perspective of the development analysed. Also, the study consults judiciary and legislative organs of the Brazilian government, such as the Câmara dos Deputados, who published on their online webpage the original version of the Constitution of 1946. The Câmara dos Deputados highlights articles and paragraphs that changed throughout the Populist Republic as well as governmental decrees concerning the economy made with Superinterdência da Moeda e do Crédito (SUMOC), as well as data characterising all governmental stimulus packages, making a classification possible (Bowen, 2009). The study reached out for autobiographic, and interview material of the actors at play, applying only the material provided by themselves or that recorded these materials, without further editions by third parties to hinder the transgression of the intentional meaning of the first party (Bowen, 2009). Here this research makes use of the JFK – Presidential Library, the LBJ – Presidential Library, as well as of the Biblioteca Nacional – Digital – Brasil, all offering a range of autobiographic material. Overall combining the aforementioned data, this research attempts to construct a robust, all-encompassing narrative giving credence to this study (Bowen, 2009). Secondary Sources. This research also included extensively secondary data. These include experts such as Lipset (1959) or Griffith (1956) indicating a socioeconomic influence on regime stability particularly for Latin American countries; or Tomini and Wagemann (2018), and their characterisation of democratic breakdowns in consequence of the regime type. Also, this research analysed the work of experts concerned with the historical evolution of Brazil, under societal, economic and institutional aspects, among other things from historians such as Green et al. (2018) or Centro de Pesquisa e Documentação de História Contemporânea Do

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Brasil (CPDOC) –, but also the publications from the Federal University of São Paulo covering additional neutral insights in the economic programmes of the governments throughout the Populist Republic. This study also makes use of material provided in newspaper and newsagencies archives such as the Folha de São Paulo or O Globo.

This research bears the challenge to access as much evidence as possible and likewise reconstruct the mechanisms at stake (Bowen, 2009:32). In this sense, the study attempts to provide a more accurate reproduction of this moment of Brazilian history via triangulation of primary and secondary data that offers the possibility to reproduce the causal mechanisms in the broader depth (Toskov, 2016). The goal here is to access as much evidence as possible and likewise reconstruct the mechanisms at stake (Bowen, 2009:32). Overall, this study followed the proposed procedure of Bowen on how to assess, qualify and analyse data as possible evidence to meet the highest standards of academic research (Bowen, 2009)

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4. Findings

4.1 Context and Examination of the Proposed Mechanisms

4.1.1 Context of the Socioeconomic Development

Although some researchers, reduced their analysis to economic reasons only, economic growth affects more than just the economic sphere; it causes and stimulates the evolution of the social dimension – referred to as a structural change in the level of production and employment (Kuznets, 1966) – but also of the technological change – mainly the degree to which the industrial and agricultural sectors enjoy technologisation/mechanisation (Szirmai, 2015). Modern research extended the historical economic approach by proposing the addition of the following data, to measure social development: the Gini coefficient to measure the development of socioeconomic discrepancies among the citizens of a nation; the evolution of the rate of illiterates; the production levels per capital and worker, as well as to measure the level of freedom citizens enjoyed (Szirmai, 2015).

The regime instability of Brazil represents a relatively complex form, grown from the accumulation of multiple aspects highlighting the necessity to include a multiplicity of data to understand the perspectives of the mechanisms at play in deeper depth (see Goldstone et al., 2010:205 – Brazil listed as a country that experienced a complex form of conflict). Following the proposal of the literature, the inclusion of historical data permits the detection of significant insights into the socioeconomic processes at play – hence requires a detailed investigation of both economic, as well as social evolution in a specific time context, based on a range of statistical evidence (Szirmai, 2015).

The Instituto Brasileiro de Geografia e Estatística (IBGE), established with the decree n°24.609 in 1934, serving the purpose of annually providing a census, offers an all-encompassing insight into the socioeconomic development, particularly of characteristics of the country and its federal states, but also the discrepancies among them. The IBGE established an online archive – a Biblioteca IBGE – with access to all Anuários Estatísticos Brasileiros (AEB) (Brazilian Statistical Yearbooks) annually collected from 1934 onwards. Since 2006, the Instituto de Pesquisa Econômica Aplicada (Institute of Applied Economic Research), established in 1964, offers a summary of all governmental statistical data on its website IPEADATA.gov.br. Contemporary and historical data offered by the provider is continuously updated based upon the latest findings.

This research focused on historical data of the census from 1940–1970, offering the following findings:

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Table 3: Brazil: Population, GDP, GDP p. capita and the annual inflation rate.

Source: IBGE (n.d.) and Skidmore (1977).

According to Table 3, the Brazilian economy, after the establishment of democracy in 1946, experienced series of economic boost and decline in consequence of series of governmental stimulus packages and varying economic programmes – international-developmentalism, based upon market liberalisation, vs national-international-developmentalism, based upon market limitations, particularly for the foreign investors and capital (see Table 8, Chapter 4.2). Under the presidency of Dutra (1946–1950) GDP on average rose by 7.64%, whereas under Vargas, the GDP slightly dropped to average growth of 6.175%; former president Juscelino Kubitschek’s administration was the longest in the period of the Populist Democracy (1956–1961), experiencing average GDP growth at 8.12%. The former presidency of João Belchior Marques Goulart, last in the democratic period, instead of encountered the second most challenging drop, ever measured in Brazil, from 6.6% in 1962 to 0.6%, leading Brazil into recession – the first was under Dutra from 11.60% to 2.40% (see Araújo et al., 2005:571).

This research investigates the features of GDP development, such as the individual sectors of the economy, to analyse the socioeconomic development in greater detail. Concerning the development of the industrial sector, Brazil experienced constant industrial growth. From 1946–1955 this sector grew by 9.3%, and contributed to GDP by 30.8%, whereas, in the years of 1955–1964, data of the census indicate additional growth (see AEB 1965 – IBGE,

Inflation (Skidmore,

1977) Inhabitants Variation (%) In Real (1999)

-millions Variation (%) In Real (1999)

In Dollar (2000) Variation (%) Variation (%) 1945 45.592.012 2,4 54.120 3,2 1.187 649 0,82 -1946 46.716.901 2,5 60.398 11,6 1.293 706 8,91 -1947 47.914.604 2,6 61.848 2,4 1.291 705 0,16 -1948 49.184.989 2,7 67.847 9,7 1.379 754 6,87 3,5 1949 50.527.615 2,7 73.071 7,7 1.446 790 4,84 6 1950 51.941.767 2,8 78.040 6,8 1.502 821 3,89 11,4 1951 53.426.485 2,9 81.864 4,9 1.532 837 1,98 10,8 1952 54.980.590 2,9 87.840 7,3 1.598 873 4,27 20,4 1953 56.602.714 3 91.969 4,7 1.625 888 1,7 17,6 1954 58.291.319 3 99.142 7,8 1.701 929 4,68 25,6 1955 60.044.720 3 107.867 8,8 1.796 982 5,62 18,9 1956 61.861.108 3 110.995 2,9 1.794 980 0,12 21,8 1957 63.738.568 3 119.542 7,7 1.876 1.025 4,53 13,4 1958 65.675.093 3 132.452 10,8 2.017 1.102 7,53 17,3 1959 67.668.599 3 145.433 9,8 2.149 1.174 6,57 51,9 1960 69.716.943 3 159.103 9,4 2.282 1.247 6,19 23,8 1961 71.817.925 3 172.786 8,6 2.406 1.315 5,42 42,9 1962 73.969.307 3 184.190 6,6 2.490 1.361 3,5 55,8 1963 76.168.814 3 185.295 0,6 2.433 1.329 2,3 80,2 1964 78.414.141 2,9 191.595 3,4 2.443 1.335 0,44 86,6 1965 80.702.958 2,9 196.193 2,4 2.431 1.328 0,5 45,5 Year Population GDP GDP p. Capita

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1965; Goldsmith, 1986). Other sources indicate an industrial growth of 7.9% between 1946/1952 and 9.9% for between 1952/1961 (Revista Conjuntura Econômica, 1971). II. Indices do Volume Fisico da Produção Industrial – the index of the physical volume of the industrial production in the period of 1949–1964 (AEB 1965- IBGE, 1965:127), confirms the growth in the Brazilian industry, alongside an increase in the number of industrial products (see AEB 1965 – IBGE, 1965), and the increase in the number of workers in the industrial sector, from 1940–1950 by 49.35% and from 1950–1960 by 27.74% (the average percentage was calculated from the data given in Table III, Appendix). Here, the state of São Paulo experienced the largest growth, highlighted by the number of industrial output; in 1949, 47.8%, and in 1959, 55.7% (see AEB 1950 - IBGE, 1950:124; AEB 1960 – IBGE, 1960:67-68; Colistete, 2007:95).

Additionally, the agricultural sector experienced a growth of only 3.6% and remained the most significant contributor to GDP by 31.7% in between 1946–1955 yet experienced a change in growth and contribution. About ‘Tables 6.1–6.3 – IBGE, 1990’ and to Table III – Appendix, the agricultural sector experienced a nearly stagnating number of people employed from 1940–1950 by 4.6% and a return in its increase in between 1950–1960 by 18.32% (the average percentage was calculated from the data given in Table III, Appendix). Evidence regarding the increase of pastureland in Brazil from 1940–1960 provides further support of the rise in this sector. For example, in 1940, 5,072,919 ha and by 1960, 20,063,333 ha land were considered as pastureland (IBGE, 1990). Furthermore, the commercial sector grew by 6.9% from 1946–1955 and contributed to GDP by 20.6% (Goldsmith, 1986). Also, the increased number of employers in this sector – between 1940 and 1950, 27.95% more people were employed and in between 1950–1960, 56.70% (the average percentage was calculated from the data given in Table III, Appendix) - confirms the growth. At the same time, the transport sector grew by 9.8% (1946–1955) contributing 8% to GDP, here additional growth for the period 1950–1960 is confirmed through Table III – Appendix. In addition, not included in Goldsmith analysis was the sector of the provision of services – in this sense, the provision of domestic services – that employed 2,732,148 people. Another significant insight to the socioeconomic development, is the share of inactive conditions, hence the non-participation of people in the above, mentioned sectors, that was 53% in 1960.

Despite the sectorial evidence for economic growth in Brazil from 1946 to 1964, the numbers of exports and imports provide further insights into the situation of the economy at stake. According to IBGE (AEB 1965 - IBGE, 1965:312), that measured the gross national expenditure (in the currency cruzeiro) and the contribution of exports in comparison to those of imports to the Brazilian economy, until 1960 the imports and their consequent cost evolution,

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exceeded the number of exports. Important to note is that the different cost evolution for the number of imports emerged since the introduction of governmentally subsidised imports by the Vargas and Kubitschek governments (Donnelly, 1973). The idea was to stimulate the number of machines and technology imported, to in turn stimulate the economic growth (see Chapter 4.2). Though relating the number of imports to the number of industrial products produced in Brazil, and the experienced economic growth, the impact of the government stimulus creation for an increase in the number of imports becomes more feasible. It supports the analysis of the GDP development and additionally of the socio aspect, as literature assumes an evolution the moment a country is increasingly technologised (see AEB 1965 - IGBE,1965:104-110).

Although Brazil experienced a general economic development (see Table 3, above), the increase in the cost of living confronted the population in their substantial being, in the years of 1948/1949 – Dutra’s government - the inflation rate was kept under 10%, in the following years after the overtake of Vargas, the rate grew nearly exponentially, reaching a peak in 1964 with a rate of 86,6% under President Goulart. Alongside the emergence of relatively high inflations rates, this obstacle was enforced by a simultaneous drop and relative stagnation of the GDP development, particularly in 1963 and the following years. Although the Brazilian government, as presented in the following chapter in greater detail, applied for monetary programmes a Milton Friedman – a reduction of the monetary expansion rate – it caused, in consequence, a fall in the real stock in money and a drop in the output (see AEB 1965, in IBGE, 1965/Morley, 1971). The detection of the reasons for this increase in inflation is rather complicated, as Brazilian governments applied the anti-inflation programmes, available and supported by economic science at that time.

Economists are divided between cost-push and demand-pull causes of inflation. First cost-push inflation is rooted in the increase of the nominal wages that in turn causes an upwards shift in the supply curve; the demand curve, through the income effect shifts upwards in the same extent as the supply curve and is supported by extra-governmental spending to stimulate the market (Chen, 2018; Kenton, 2020; Schwarzer, 2018).

In consequence of rising loans, employers and imports tend to raise their prices to re-finance the increase in cost. Therefore, the market experiences a proportional increase in the nominal price level, increasing the inflation rate – wage-price circle –. At the same time, if the market experiences a demand-pull, in consequence of an increase of the wages, yet the supply side does not keep pace with the increase of the actual demand, the market experiences an increase in prices, leading companies to estimate a false increase in demand through additional profits gained. In the presence of bottlenecks, the increase in factor prices stimulates further