Menace on the Menu: The Financialization of Farmland and the War on Food

By Colin Todhunter

Republished from Countercurrents.

Between 2008 and 2022, land prices nearly doubled throughout the world and tripled in Central-Eastern Europe. In the UK, an influx of investment from pension funds and private wealth contributed to a doubling of farmland prices from 2010-2015. Land prices in the US agricultural heartlands of Iowa quadrupled between 2002 and 2020.  

Agricultural investment funds rose ten-fold between 2005 and 2018 and now regularly include farmland as a stand-alone asset class, with US investors having doubled their stakes in farmland since 2020.  

Meanwhile, agricultural commodity traders are speculating on farmland through their own private equity subsidiaries, while new financial derivatives are allowing speculators to accrue land parcels and lease them back to struggling farmers, driving steep and sustained land price inflation. 

Top-down ‘green grabs’ now account for 20% of large-scale land deals. Government pledges for land-based carbon removals alone add up to almost 1.2 billion hectares, equivalent to total global cropland. Carbon offset markets are expected to quadruple in the next seven years. 

These are some of the findings published in the new report ‘Land Squeeze’ by the International Panel of Experts on Sustainable Food Systems (IPES), a non-profit thinktank headquartered in Brussels. 

The report says that agricultural land is increasingly being turned into a financial asset at the expense of small- and medium-scale farming. The COVID-19 event and the conflict in Ukraine helped promote the ‘feed the world’ panic narrative, prompting agribusiness and investors to secure land for export commodity production and urging governments to deregulate land markets and adopt pro-investor policies.  

However, despite sky-rocketing food prices, there was, according to the IPES in 2022, sufficient food and no risk of global food supply shortages. Despite the self-serving narrative pushed by big agribusiness and land investors, there has been no food shortage. The increased prices were due to speculation on food commodities, corporate profiteering and a heavy reliance on food imports.  

At the same time, carbon and biodiversity offset markets are facilitating massive land transactions, bringing major polluters into land markets. The IPES notes that Shell has set aside more than $450 million for offsetting projects. Land is also being appropriated for biofuels and green energy production, including water-intensive ‘green hydrogen’ projects that pose risks to local food production. 

In addition, much-needed agricultural land is being repurposed for extractive industries and mega-developments. For example, urbanisation and mega-infrastructure developments in Asia and Africa are claiming prime farmland.   

According to the IPES report, between 2000 and 2030, up to 3.3 million hectares of the world’s farmland will have been swallowed up by expanding megacities.  Some 80% of land loss to urbanisation is occurring in Asia and Africa. In India, 1.5 million hectares are estimated to have been lost to urban growth between 1955 and1985, a further 800,000 hectares lost between 1985 and 2000, with steady ongoing losses to this day.  

In a December 2016 paper on urban land expansion, it was projected that by 2030, globally, urban areas will have tripled in size, expanding into cropland. Around 60% of the world’s cropland lies on the outskirts of cities, and this land is, on average, twice as productive as land elsewhere on the globe.  

This means that, as cities expand, millions of small-scale farmers are being displaced. These farmers produce the majority of food in developing countries and are key to global food security.  In their place, we are seeing the aggregation of land into large-scale farms and the spread of industrial agriculture and all it brings, including poor food and diets, illness, environmental devastation and the destruction of rural communities.  

Funds tend to invest for between 10 and 15 years and can leave a trail of long-term environmental and social devastation and serve to undermine local and regional food security. Returns on investments trump any notions of healthy food, food security or human need. 

PLEASE SUPPORT OUR WORK BY MAKING A DONATION TODAY!

The IPES notes that, globally, just 1% of the world’s largest farms now control 70% of the world’s farmland. These tend to be input-intensive, industrial-scale farms that the IPES says are straining resources, rapidly degrading farmland and further squeezing out smallholders. Moreover, agribusiness giants are pursuing monopolistic practices that drive up costs for farmers. These dynamics are creating systematic economic precarity for farmers, effectively forcing them to ‘get big or get out’. 

Factor in land degradation, much of which is attributable to modern chemical-intensive farming practices, and we have a recipe for global food insecurity. In India, more than 70% of its arable land is affected by one or more forms of land degradation. 

Also consider that the Indian government has sanctioned 50 solar parks, covering one million hectares in seven states. More than 74% of solar is on land of agricultural (67%) or natural ecosystem value (7%), causing potential food security and biodiversity conflicts. The IPES report notes that since 2017 there have been more than 15 instances of conflict in India linked with these projects. 

Nettie Wiebe, from the IPES, says: 

“Imagine trying to start a farm when 70% of farmland is already controlled by just 1% of the largest farms – and when land prices have risen for 20 years in a row, like in North America. That’s the stark reality young farmers face today. Farmland is increasingly owned not by farmers but by speculators, pension funds and big agribusinesses looking to cash in. Land prices have skyrocketed so high it’s becoming impossible to make a living from farming. This is reaching a tipping point – small and medium scale farming is simply being squeezed out.” 

Susan Chomba, also from the IPES, says that soaring land prices and land grabs are driving an unprecedented ‘land squeeze’, accelerating inequality and threatening food production. Moreover, the rush for dubious carbon projects, tree planting schemes, clean fuels and speculative buying is displacing not only small-scale farmers but also indigenous peoples. 

Huge swathes of farmland are being acquired by governments and corporations for these ‘green grabs’, despite little evidence of climate benefits. This issue is particularly affecting Latin America and sub-Saharan Africa. The IPES notes that some 25 million hectares of land have been snapped up for carbon projects by a single ‘environmental asset creation’ firm, UAE-based ‘Blue Carbon’, through agreements with the governments of Kenya, Zimbabwe, Tanzania, Zambia and Liberia. 

According to the IPES, the ‘land squeeze’ is leading to farmer revolts, rural exodus, rural poverty and food insecurity. With global farmland prices having doubled in 15 years, farmers, peasants, and indigenous peoples are losing their land (or forced to downsize), while young farmers face significant barriers in accessing land to farm. 

The IPES calls for action to halt green grabs and remove speculative investment from land markets and establish integrated governance for land, environment and food systems to ensure a just transition. It also calls for support for collective ownership of farms and innovative financing for farmers to access land and wants a new deal for farmers and rural areas, and that includes a new generation of land and agrarian reforms. 

Capital accumulation based on the financialisation of farmland accelerated after the 2008 financial crisis. However, financialisation of the economy in general goes back to the 1970s and 1980s when we witnessed a deceleration of economic growth based on industrial production. The response was to compensate via financial capitalism and financial intermediation.  

Professor John Bellamy Foster, writing in 2010, not long after the 2008 crisis, states: 

“Lacking an outlet in production, capital took refuge in speculation in debt-leveraged finance (a bewildering array of options, futures, derivatives, swaps, etc.).”  

The neoliberal agenda was the political expression of capital’s response to the stagnation and involved four mechanisms: the raiding and sacking of public budgets, the expansion of credit to consumers and governments to sustain spending and consumption, frenzied financial speculation and militarism. 

With the engine of capital accumulation via production no longer firing on all cylinders, the emergency backup of financial expansion took over. Foster notes that we have seen a shift from real capital formation in many Western economies, which increases overall economic output, towards the appreciation of financial assets, which increases wealth claims but not output.  

Farmland is being transformed from a resource supporting food production and rural stability to a financial asset and speculative commodity. An asset class where wealthy investors can park their capital to further profit from inflated asset prices. The net-zero green agenda also has to be seen in this context: when capital struggles to make sufficient profit, productive wealth (capital) over accumulates and depreciates; to avoid crisis, constant growth and fresh investment opportunities are required.  

The IPES report notes that nearly 45% of all farmland investments in 2018, worth roughly $15 billion, came from pension funds and insurance companies. Based on workers’ contributions, pension fund investments in farmland are promoting land speculation, industrial agriculture and the interests of big agribusiness at the expense of smallholder farmers. Workers’ futures are tied to pension funds, which are supporting the growth and power of global finance and the degradation of other workers (in this case, cultivators).   

Sofía Monsalve Suárez, from the IPES, states: 

“It’s time decision-makers stop shirking their responsibility and start to tackle rural decline. The financialisation and liberalisation of land markets is ruining livelihoods and threatening the right to food. Instead of opening the floodgates to speculative capital, governments need to take concrete steps to halt bogus ‘green grabs’ and invest in rural development, sustainable farming and community-led conservation.” 

Unfortunately, ordinary people cannot depend on ‘decision-makers’ and governments to bring about such change. Ordinary people themselves have always had to struggle for change and improvements to their lives. Groups across the world are fighting back, and the IPES report provides some inspiring examples of their achievements. 

Readers can read the IPES report here. 

The author specializes in food, agriculture and development issues and his two recent books on the global food system can be read here.

Economic and Social Crises Keep Deepening: 48 Points That Will Shape the Future

By Shawgi Tell

Not only have the policies of the rich at home and abroad not stopped economic and social decline, the rich are actually taking social irresponsibility to new levels and making things worse worldwide. They are unable and unwilling to solve serious problems plaguing humanity. Opening the path of progress to society is not on their agenda.

Connecting just a few dots in an intelligible way produces a clear picture of the destruction unfolding worldwide. It is no accident that more people are writing about a miserable dystopian future where people will have to develop new creative ways of defending the rights of all. The information below is especially timely given the cheap euphoria displayed recently by the short-sighted rich and their political and media representatives about the “solid” 850,000 jobs the U.S. economy “added” in June 2021.

1. Inflation is increasing rapidly at home and abroad and the dollar’s purchasing power is still falling.

2. Globally, supply chains affecting many sectors are not operating smoothly; many are worried about contrived and non-contrived disruptions lasting for months, even years.

3. Ransomware incidents and major cyberattacks are not diminishing.

4. Millions of U.S. workers are misclassified as contractors, which means that they do not have (generally weak) protections.

5.  Thousands of companies at home and abroad are “zombie companies”—i.e., they don’t make a profit after paying down their debts, they just live a dead life.

6. Student debt in the U.S. keeps soaring.

7. College tuition in the U.S. and elsewhere keeps climbing.

8. Marriage rates in the U.S. are at an all-time low.

9. Birthrates are declining globally.

10. The U.S. experiences a higher infant mortality rate and a higher prevalence of obesity compared with most OECD member countries.

11.  The number of Americans who have moved back in with family or friends over the past 18 months is extremely high.

12. Homelessness is high nationwide and increasing significantly in some major U.S. cities; crime is also up.

13. Various “reforms” in countless sectors in many countries are superficial, phony, and non-substantive.

14. Anxiety and depression remain widespread worldwide.

15. Anti-depressant use remains high.

16. Mass murders and killings have increased in recent years in the U.S.; so have social and civil unrest.

17. Everyone everywhere is skeptical of the mainstream media and struggling not to be confused, ambushed, and humiliated every hour.

18. Around the world hundreds of millions have joined the ranks of the poor over the past 18 months.

19. Globally, well over ten million business have disappeared permanently and thousands more will disappear in the next five years.

20.  Leading economic experts and officials have no real solutions for anything and people continually have low levels of trust in “experts” and government; the rich continue to operate with impunity.

21. There is more polarization, division, and anger in society.

22. Poverty and inequality keep growing worldwide; wealth concentration is staggering and unprecedented.

23. Digital addiction and attendant problems won’t stop increasing.

24. More U.S. college and university administrators, trustees, and leaders are abandoning the intellectual mission of colleges, restricting faculty voice, and turning college into Disney and fun.

25. Getting simple things done is taking longer and becoming more convoluted and frustrating, especially when dealing with retailers, companies, and various agencies.

26. Surveillance and police-state arrangements are multiplying rapidly and becoming more diverse and sophisticated at home and abroad.

27. The media blackout on thousands who continue to experience serious side effects from vaccines continues.

28. Newly-elected “progressive” politicians in the U.S. and elsewhere are proving to be as ineffective as the “old guard.”

29. Privatization and deregulation keep increasing and wreaking havoc worldwide.

30. Anglo-American imperialism thinks that constantly treating China and Russia as bogeymen will keep fooling the gullible and divert attention from deep problems in the Anglo-American world.

31. The unionization rate of American workers is at a historic low, which is bad for all workers in all sectors.

32. More than 130 million working Americans can live off their savings for six months or less before going broke.

33. Mergers and acquisitions continue apace in 2021, concentrating even more wealth in even fewer hands.

34. Central banks around the world keep printing phantom money while stock market bubbles grow larger.

35. The U.S labor force participation rate remains low.

36. The number of long-term unemployed (27 weeks or more) in the U.S. is still increasing.

37. Millions of Americans have started to lose their jobless benefits.

38. More than 40% of Black families and Latino families in the U.S. have no access to an employer-sponsored retirement plan.

39. Black and Latino Americans are experiencing the biggest decline in life expectancy in decades.

40. In recent years, overall job quality for Americans has deteriorated significantly.

41. At least thirty million Americans lack access to high-speed internet.

42. The U.S. opioid overdose crisis, which pharmaceutical companies were recently found guilty of sponsoring, persists.

43. In Africa, nearly 40% of employed youth are considered poor.

44. Around the world, nearly one out of ten people experience hunger and the number of undernourished people has grown by millions in recent years.

45. The official unemployment rate exceeds 10% in at least 12 countries in (Western and Eastern) Europe. Fourteen countries fall into this category for North and South America. The real numbers are higher.

46. More than 27% of youth in Central Asia and Southern Asia are not in employment, training, or education.

47. In the past five years more countries have experienced violent conflict, while violent crime across the world has also increased.

48. Despite endless happy economic news in the mainstream media, economies around the world are far from recovering; many never recovered from the Great Recession of 2008 and mass vaccinations will not solve deep structural economic problems.

The list goes on and on. This is the tip of the iceberg. Numerous problems persist on all continents. The facts above do not paint a picture of a bright and promising future for humanity. Widespread destruction prevails in the obsolete neoliberal world.

But there are also openings and contradictions that people from all walks of life are being compelled to harness in order to advance the public interest and restrict the illegitimate control and authority of major owners of capital. The desire for real progress is palpable and growing; it emerges from the concrete conditions as they present themselves today. The international financial oligarchy cannot provide any solutions to the problems plaguing humanity today, they just have more catastrophes in store for everyone and are blocking the empowerment of the people. None of these serious problems can be solved, however, so long as the people remain marginalized and disempowered. A new direction, orientation, and public authority are urgently needed.

Humanity is entering a new and deeper crisis with qualitatively different and more dangerous features. Crisis is a turning point that contains both peril and opportunity. Crisis is not always just a negative thing; it means things cannot continue in the old way and something significant is going to have to eventually give. It usually takes a serious crisis or trauma to catalyze and propel much-needed change. In this way, crisis overcomes stagnation and complacency and sets the stage for something new. The negation of the negation operates with a greater vengeance in such defining moments, giving rise to a new synthesis, a new equilibrium, which gives rise to yet another dynamic which must assert itself sooner or later. The dialectic lives and cannot be extinguished. What comes next in the complicated here and now is unfolding consciously and spontaneously.

The pace and rate of change today is exhilarating and people’s desire to protect the social and natural environment is growing. The trial of strength between capital-centered forces and human-centered forces is bound to increase because conditions are demanding a new authority that affirms the rights of all. An alternative is necessary and possible. What this will look like is in the hands of the people themselves. Only they can be relied on to usher in a bright future for humanity free of privileged private interests wrecking the social and natural environment.

Shawgi Tell, PhD, is author of the book “Charter School Report Card.” His main research interests include charter schools, neoliberal education policy, privatization and political economy. He can be reached at stell5@naz.edu.

Why Do Stocks Rise While the Country Burns?

By Contention News

This is a special edition of Contention News, a new dissident business news publication, shared exclusively at the Hampton Institute. You can read more and subscribe here. 

A reader sent us a brief, important request this week: “would like to see more on why markets are up when the world is on fire.” 

This is, in many ways, the theme of almost every edition of Contention, and we’ve pulled it apart a number of times:

• Dire economic straits can be good for big business as workers are less likely to press for higher wages, and competition goes bankrupt.

• Investment prices are all about expectations, and the big losses businesses keep reporting aren’t as bad as predicted.

• Those forecasts aren’t rational, and investors are arbitrarily assuming the worst can’t happen.

• Central bank action is swelling asset prices — not like a bubble, but like a tumor.

But let’s elaborate the reasons for this disconnect yet again, because new explanations emerge all the time. Multiple phenomena are causing this contradiction, all part of the same basic force: state manipulation of markets to protect concentrated wealth.

First, let’s be clear: “markets” are not up in every sense. The major indexes are up: the S&P 500 and Nasdaq are already back at record levels and the Dow is not far off its all-time-high. But this is a reflection of the exceptional performance of very few components in each index, not broad-based gains. As of last week:

• Half of the stocks that make up the S&P 500 are down for the year still, only 4% of its components are driving all the record gains. 

• The digital oligopoly — Facebook, Apple, Amazon, Alphabet, and Microsoft — are up 37% this year, but without them the S&P 500 is down 6%.

• Fully 64% of S&P 500 components are underperforming the index, and they’re missing it by an average of 22%. 

• All-country stock performance minus the S&P 500 has done nothing this year. 

This international perspective highlights another crucial, largely unreported aspect of the alleged stock rally: pricing the S&P 500 in euros instead of dollars wipes out all of its record performance. 

The bull run is closely associated with the devaluation of the dollar, because inflated liquidity is being blasted directly at equity markets. 

Remember: stock prices reflect discounted future cash flows. Cash flow means income left over after expenses, so if investors have reason to believe that income will increase or expenses decrease in the future, stock prices move up. Monopoly pricing power means higher income, suppressed wages mean lower expenses, so large-scale bankruptcies and unemployment can actually benefit large firms.

Earnings expectation beats have moved stock prices upwards, but only 1% of that outperformance has come from increased income. The rest has come from cutting expenses, i.e. the very layoffs and cancelled purchases that make the rest of the economy miserable.

Because forecasts around cash flows aren’t certain, prices take into account a risk factor closely associated with interest rates. The larger the risk, the bigger the discount for the future cash flows, and the lower the stock price goes.

The Federal Reserve has taken emergency action this year to suppress interest rates. It dropped the rate it charges banks to near-zero levels, but more importantly it bought up trillions of dollars in bonds — including corporate bonds for the first time. 

Bond prices and their interest rates move inversely to one another, so this single-payer bond market bids up prices and sets a ceiling for rates. This squeezes investment out of safe assets, and makes riskier investments — like stocks — artificially more secure-looking. 

The implicit — sometimes explicit — assumption is that the Fed won’t let markets crash for long. We now have central planning for capital, so why wouldn’t you buy? 

But if the cost cuts that drove earnings beats in the last quarter have now hit bone, if failed fiscal stimulus means a big drop in aggregate demand, or if accelerating political chaos raises volatility too much and markets do drop, what can the Fed do? Their only card left may be to intentionally depreciate the dollar in even more aggressive ways. 

That is to say, the most likely outcomes of our present condition are that things keep burning like they are or the people that started the blaze will throw gasoline on it. Either way Contention will be here to sound the alarm. 

For more anti-imperialist business analysis, subscribe to Contention. 

Brazil's Gramscian Moment: On Cultural Hegemony and Crisis

By Jacques Simon

With the Brazilian senate confirming Dilma Rousseff's impeachment procedure, it seems increasingly likely that Brazil could soon see the long-loved Workers Party (PT) out of office. Given the seemingly unshakable support that the party had up until a few years ago, the deep political crisis that Brazil faces today may seem a bit surprising. How is it that, after winning four consecutive elections, three by a landslide, the PT's Dilma Rousseff is now facing impeachment charges, and people are in the streets by millions? Why have Brazilians completely turned their backs on the PT, despite it having enjoyed fourteen years of political hegemony?

The mainstream media has identified two main causes to the current political turmoil in Brazil.

The first is corruption. Operacao Lava Jato (operation carwash), until recently led by the now famous Justice Moro, has shaken the political class to its core. Millions of reais flowing from top Petrobras executives into the pockets of the political elites have gotten widespread news coverage. Of course, this is not factually incorrect, but it disregards the fact that corruption has been the name of the game in Brazilian politics since the end of the military regime in 1985.

In fact, Lula's 2006 re-election happened in the midst of the Mensalão scandal, where the PT was accused of buying votes in congress. Transparency International has kept Brazil at a steady 76th on 167 in terms of global corruption between 2012 and 2015, even though the Petrobras scandal started in 2014.

Corruption is such a common occurrence in the country that a term has been created to describe Brazilian institutions' feeble reactions to shady business. In Brazil, when a scandal is said to "end in pizza," it means that charges where not laid out to the extent that they could or should have.

It seems that the corruptibility of the political elite is taken for granted by Brazilians. While it may have been an accelerating factor in the current crisis, it certainly does not seem to be the determinant variable in Rousseff's demise, who, in fact, is not even facing corruption charges unlike her opponents.

The second cause to the political crisis identified by the mainstream media has been the media itself.

Some have pointed the finger at the largely right wing and anti-PT bias of Brazil's largest news corporations. Once again, while not factually false, that position of the media is not a recent occurrence.

The same families have held the five main media companies for decades. Grupo Globo for instance, the country's largest media corporation, has been privately owned by the Marinho family since its creation in 1965. There has not been a recent change in the media's ideological affiliation: the right-wing mainstream media has been a constant throughout the PT rule.

Once again, it seems that this variable may be an accelerating factor in the PTs downfall, but it certainly does not seem to be the determinant variable.

In reality, two things have actively participated in Dilma's crash: an economic recession, and her turn away from the PT's traditional politics. All else is anecdotal.

Let's turn to an influential political theorist of the early twentieth century to further elaborate on that.

This conclusion can be reached by using Antonio Gramsci's concept of cultural hegemony. It might be a bit of an overstatement to say that the Italian philosopher is making a come back. Undoubtedly, most people still do not know who he was, and few are aware of the importance of his theories. It is however, somewhat satisfying to see that Google searches for his name have been growing exponentially since the early 2000s and show no sign of slowing down.

It seems that the global capitalist crisis of 2008, which shook the entire world, has made a few people question the strength and general positive nature of the economic system we are living in. This kind of uncertainty creates a fertile ground for previously outlier positions. In Gramscian terms: such important events destabilize otherwise anchored cultural hegemony.

This concept-that of cultural hegemony-is perhaps Gramsci's most important contribution to the field of political science. The idea is the following: power, in all its forms, is rooted in popular consent. In order to successfully establish a specific way of organizing society, you must first get the local population on board. In fact, people need to be so convinced that that specific organization is the way things must be that they should not question its basis.

Rival ideologies should not compete on equal terms. To take the place of the cultural hegemon, they need first to contest its de facto legitimacy, and then successfully claim its place in the hearts and minds of the people.

In Gramscian literature, this struggle will take place as communism inevitably takes the place of global capitalism. This remains to be seen, but while we're waiting this theory can be applied to smaller instances of ideological shifts. Brazil is living just that.

In order to demonstrate this, let us first take a quick detour by Brazilian political history.

Until 1985, the country was ruled by a military dictatorship, which relied on brutal repression to get its way.

Things changed during the '80s, an active period when it comes to democratization worldwide. Some political scientists-Samuel Huntington in particular-have gone so far as to call that phase the "third-wave of democracy." Along with other South American countries, Brazil saw its military regime come to an end, and hosted its first democratic elections in over two decades.

Since the 1985 election, at least three tendencies have become abundantly clear.

First, the country has had a history of inflationary problems. If we consider the rate of inflation over the last three decades, we see two peaks. The first, in 1990, reached an astonishing 6,800%. The second, in 1994, culminated at 5,000% in June of that year. But even if we disregard these extreme cases, Brazil has had far from a stable economy throughout the end of the twentieth century. For instance, the average inflation in 1987 was 363% and in 1992 it was 1,119%.

The second clear tendency is that when Brazilians are unhappy with a governing party, they let it know with their ballots. The third is that they rarely offer a second chance: the results of the three presidential elections following the fall of the military regime led three different parties in office.

First, in 1985, Tancredo Neves of the Brazilian Democratic Movement Party (BDMP) was elected. Though, in a Hollywood-worthy turn of events he collapsed just before gaining office and died shortly after, his running mate and vice president, José Sarney, assumed the role of president.

Four years later, with inflation bordering 2,000%, Fernando Collar de Mello's Christian Labour Party (NRP) was elected with 53% in the second round. The BDMP only managed to secure 11.5%.

The following elections took place in 1994, just after the second inflationary peak. Once again, this economic fiasco led to the ruling party's political demise. The NRP secured an astounding 0.6% of the popular will, while the BDMP came fourth with 4.6%. The Brazilian people where still looking for their party: a whopping 95% of the population was not satisfied with what they had seen since the fall of the military regime a decade prior.

This time, Fernando Henrique Cardoso's Brazilian Social Democracy Party (PSDB) was elected in the first round with over 54% of the ballots: a landslide victory considering that the runner-up was Lula's PT with 27%. It is important to note here that this was the most left-leaning government elected since the end of the military regime. While all other parties had been right-of-center, Cardoso ran and governed in a clearly social-democratic manner.

FHC fought inflation tooth-and-nail (successfully-bringing it from an average of 3,000% in 1994 to 7% in 1997 by pegging the reais to the American dollar), opened the Brazilian economy to foreign investments (FDIs augmented threefold between 1995 and 2000), and privatized some industries in order to fund social projects. FHC is credited with creating social security and generalizing taxation in Brazil.

The Brazilian population responded positively to this newfound stability. A constitutional amendment was passed to allow Cardoso to run for a second term. In 1998, he was re-elected with a majority of 53.1% in the first round. During his four years in office, he had lost only one percentage point of support. He went from winning 25 out of 26 states, to 23. The surprising stability of the results of his two presidential campaigns shows how faithful his electoral base was. This popularity was not unconditional however. During his second term, the hens came back to roost: his desire to please both workers and capital created an influx in public debt.

During his 8 years as president, federal as well as state and municipal debt increased more than twofold. In an effort to save the national economy from an exponential debt crisis, and a freefalling export sector due to economic collapses around the world (Asia and Russia were seeing their economies crumble), he took a number of neoliberal measures. He liberated the reais from its US dollar parity, accepted a structural adjustment program from the IMF, and undertook a structural reforms of the economy in which privatization and austerity held a key role. The results where what one would expect: GDP per capita plunged, the value of the reais was cut in half, and capital flew out of the country at high rates.

Following the footsteps of recent history, the government swapped hands in 2002, when Luiz Inácio Lula da Silva, who was running his fourth campaign for the Workers Party (PT), won two thirds of the votes against the PSDB candidate. This was the beginning of an era for Brazil, one that we haven't seen the end of-yet.

The PT was the most left-wing government since the fall of the military regime. Under Lula's presidency, real social programs were put in place, yielding real results. To name only a few, the 2003 Fome Zero program aimed at eradicating extreme poverty in the country, the Bolsa Família and Bolsa Escola programs provided impoverished working class Brazilians with an allowance if their children were vaccinated and attended school, and the Progama de Aceleraçāo do Crescimento (PAC) had a multibillion reais budget to invest in infrastructure.

Make no mistake: Lula's presidency was not that of a socialist. In fact, the left wing of the PT was so disappointed with his lack of defiance towards capital that they split to form a separate party called the Socialism and Liberty Party (PSOL). But Lula did provide working class families with a net increase in their material condition. During his two terms in office, the gini coefficient of country (measuring wealth inequality) fell continuously, the GDP per capita increased substantially, as did the GNI. 98% of people born after 1990 now have at least a secondary education, compared to 70% for those born in 1970.

It was with this kind of mindset that Lula was re-elected in 2006, winning close to 50% in the first round, and then by a more than 20 percentage point margin in the runoff. Constitutionally barred from a third presidency, his protégé Dilma Rousseff ran in 2010, and won by an over 10 percentage point margin. Running again in 2014, she got re-elected-albeit not with as impressive result as previously.

This brief recap of Brazilian political history demonstrates two things:

First, the kind of legitimacy that has been enjoyed by the PT is a one-of-a-kind instance since the fall of the military regime. However, the second lesson is that this support is quite logical. Lula and Dilma have provided the working class with what it has been asking for since 1985: a stable democracy, and material returns for the working class.

From a Gramscian perspective, this legitimacy is rooted in cultural hegemony. Indeed, PT rule and the political scene since Lula's arrival in power have been causally linked in popular conscience. This means that any opposing ideology has an uphill battle before it: that of discrediting PT's social democracy.

As of now, the PT has won four consecutive presidential elections in Brazil; half of all those that have taken place since the end of the military regime. For a time, Lula's party looked like it was the country's natural party, as if the PT and the Brazilian people had some sort of indivisible bond. So how did we arrive to the place where we are now?

According to Gramsci, cultural hegemony is essential for the ruling class. The PT has undoubtedly acquired something of that nature. It has offered Brazil social democracy. It promised a capitalistic system with real returns for the people, and, to some extent, has delivered. The material condition of a large amount of people increased impressively during the Lula era and, to a lesser extent, during Dilma's early days. But if there is one thing capitalism has shown, it is that these kinds of honeymoon periods are always finite, and at some point the economy contracts over its own weight.

The party's cultural hegemony rested on two things: a booming economy, and social democratic policies. Both fell apart in the last two years. First, the country's rise to economic prosperity came to a halt. The economy that the PT had created was highly dependant on exports to countries like China or the US. With these countries' economies contracting, the model ceased to work. Brazil's GDP growth was divided by two between 2011 and 2012. The reais has plummeted in face of the US dollar since 2011.

Between mid-August 2014 and today the Petrobras stock, Brazil's largest company worth about 10% of the country's GDP has fell from $23.35 to $8.44. Brazil, in other terms, is facing the harsh realities of capitalism.

This left Dilma with two options: either take a left-wing approach and handle the crisis by stimulating demand, nationalizing big industries, and reforming the tax code to take money where it is, or, take the right-wing path.

She chose the latter.

2015 was the year of austerity in Brazil. Budget cuts, backpedalling on investment programs, cuts to social security… the Rousseff government fell to right-wing pressure and implemented capital-friendly policies. This came after she had won the elections one-year prior with a left wing discourse. This shift in position was one of many blows to the PT's cultural hegemony. By disavowing her party's traditional positions, Dilma legitimized dissident opinions. It is thus unsurprising that the lion's share of her critics, Temer included, come from her political right.

Indeed, now that Dilma is, at least temporarily, out of office, the interim government has already called for widespread neoliberal policies, which include cuts in public spending, decreases in welfare, and cutting jobs from the federal government.

The Rousseff government has dug its own grave by coming back on settled questions. The president and her administration have broken the ideological continuity of the PT rule, which in turn destabilized the foundation of their authority. She opened a door to her right, which allowed contestation. With the hegemonic left-wing personalities turning to neoliberalism, nothing was keeping public opinion from going in that direction.

The demographic participating in the ongoing protests further proves this. One image speaks volumes about the kind of people fuelling these events. A visible rich, white couple is seen marching alongside a baby carriage pushed by a black nanny. This photo sparked mass criticism in Brazil-a country where the racial and wealth divide is still very much a reality. Some have even reported protesters drinking champagne at anti-PT events. This segment of the Brazilian population is the one represented in Temer's provisional government. Clearly, what is being witnessed is not an uproar from impoverished favela youths, but rather a movement that is largely dominated by white, upper-middle-class individuals, whose right-wing bias has been gaining traction through legitimization.

Worst of all, a specter is haunting Brazil-the specter of inflation. Granted, we are far from the four digit numbers that plagued the country in the late '80s and mid '90s. But nonetheless, since 2014, inflation has almost double from about 5.5% to 10.5%-well above the average of 4% that the country had become accustomed to during Lula's time. In fact, 2015 was the year with the highest rate of inflation since the country has been under PT rule. This has sparked some concern amongst the general population, who fear the return of hyperinflationary pressure.

The point is the following: The PT had acquired a cultural hegemony, which mechanically provided it with popular legitimacy. The schematic being used, however, was based on a capitalistic logic of economics, which is fragile and ultimately unsustainable. When the inevitable turmoil arrived, the PT could have taken measures to ensure that material benefits from the working class were not withdrawn, but decided to dive into neoliberal reforms instead. By backpedalling away from their own logic, which was the backbone of their cultural hegemony, the PT delegitimized their position, providing a fertile ground for ideological debate. This is why the right-wing media and corruption scandals are gaining traction today, even though they have always been around.

This leaves Brazil in quite an awkward situation. The population is disillusioned by the Left and is turning to the Right in order to solve their problems. Presumably, this is a bad idea. But not all hope is lost. The possibility of having a new Left rise from the old one's ashes is still possible. For that, however, there would need to be a conscious effort to establish a new cultural hegemony.

Jacques Simon is a French national, currently studying politics at the University of Ottawa in Canada. His interests include political economy, comparative politics, and the study of radical politics.