Pombal, 1920 – Rio de Janeiro (Brasil), 2004
By Carlos Eduardo Martins e Rodrigo L. Medeiros
Born in the interior of Paraíba, Celso Furtado graduated in law from the University of Brazil, in Rio de Janeiro. In 1943, he entered the Department of Public Service Administration (DASP) through a public examination. Two years later, he joined the Brazilian Expeditionary Force (FEB) in Italy. He later earned a doctorate in economics at the University of Paris, where, at 28 years old, he presented a thesis on the Brazilian colonial economy. Upon returning to Brazil, he moved in 1948 to Santiago, Chile, where he joined the founding core of the Economic Commission for Latin America and the Caribbean (ECLAC). At this institution, he worked alongside economist Raúl Prebisch, who wrote its foundational document in 1949, launching the national-developmentalist paradigm.
From Prebisch, the Brazilian economist absorbed the critique of the theory of comparative advantage through the concepts of center and periphery and the deterioration of the terms of trade, as well as the proposal to overcome international agricultural or mineral-export specialization through import substitution industrialization. Influenced by Keynesianism, Furtado developed the theme of state planning as a technical contribution to ECLAC’s work. In 1953, he presided over the Mixed ECLAC-BNDE Group (National Bank for Economic Development) in Rio de Janeiro, which prepared a study on the Brazilian economy emphasizing planning techniques. The Mixed Group’s report, published in 1955, was one of the foundations for the Goals Program of Juscelino Kubitschek’s developmentalist government (1956-61). In 1958, he was appointed director of BNDE; between 1960 and 1964, he was superintendent of Sudene (Superintendence for the Development of the Northeast), which he conceived and designed; and between 1962 and 1963, he was Brazil’s first Minister of Planning, when he prepared the Three-Year Plan.
Analyses of Underdevelopment
Furtado’s major contribution lies in his studies on Brazil and underdevelopment. Underdevelopment is defined by the inability of a national economy to internalize its decision-making centers, by structural duality that leaves a segment of the population unemployed or employed in low-productivity activities, and by cultural colonialism, which reduces internal savings, depresses the national productive apparatus, and generates deficits in the balance of payments, reinforcing the previous phenomena. For him, underdevelopment is not a stage but the result of the peripheral condition of international insertion. The strategy to overcome it varied throughout his work. Until the late 1950s, he was linked to the belief in the integrative role of import substitution industrialization and the complementary role of agrarian reform aimed at the most backward landholding structures. This vision is present in the classic Economic Formation of Brazil (1959), which exposes the roots of Brazilian underdevelopment, emphasizing its colonial origins, and reveals obstacles to the formation of an endogenously dynamic national economic system. Regional issues gain prominence. The primary-exporting latifundium, a concentrator of income, blocks the integration of the Northeast into the national industrialization process; agrarian reform is indispensable there to eliminate regional disparities and affirm the development process nationally. With the social and political confrontations marking João Goulart’s government, Furtado radicalized the emphasis on social reforms.
The 1964 military coup revoked his political rights. Exiled, Furtado moved to Chile and the United States, where he taught at Yale. In 1965, he took the Chair of Economic Development at the University of Paris, remaining affiliated with the Sorbonne for twenty years.
Early in this period abroad, he was greatly disappointed with the results of import substitution. For him, this industrialization had created a new dualism by relying on labor-saving technologies suited to central countries but not to peripheral ones. These did not absorb the surplus rural labor and created high disguised urban unemployment rates, allocating the urban population to low-productivity segments. Furtado attributed the stagnation of peripheral import substitution capitalism to a shortage of foreign exchange to deepen industrialization. This shortage results from the deterioration of the terms of trade, associated with structural unemployment, protectionism from central countries, and inelastic demand for primary products. This approach — in which socialism represents the only alternative for development — appears mainly in Underdevelopment and Stagnation in Latin America (1966) and Theory and Policy of Economic Development (1967).
In the 1970s, Furtado revised this view in books such as Latin American Economy (1976) and The New Political Economy (1976), highlighting the role of transnational corporations to enable the development of peripheral capitalism, as well as its financial burden. However, he bet on democracy and the strong social consensus it can generate around social reforms as the factor that can transform peripheral societies through coordinated state action, particularly in semicontinental countries where industrialization developed while preserving underdevelopment.
New Dependency and New Generations
With redemocratization, Furtado was appointed Brazilian ambassador to the European Economic Community (1985-1986) in Brussels and Minister of Culture in the Sarney government (1986-1988). The Latin American external debt crisis of the 1980s was the subject of The New Dependency, External Debt, and Monetarism (1982) and ABC of the External Debt (1989). The locus of “new dependency” would be the dictates of the financial system led by Wall Street and Washington.
Throughout the 1990s, the Washington Consensus and neoliberal globalization took hold in Latin America. In his analyses, Furtado emphasized financial and technological dimensions, as well as the power of the United States. Nevertheless, he reaffirmed his belief in the ability of semicontinental peripheral countries to direct their development process through organized capitalism, based on strong social support and internal financial centralization that promotes, through public and private banking sectors, the development of the local industrial bourgeoisie, generating a consumption pattern that prioritizes technological development and the internal and regional market.
His last writing, The Challenges of the New Generation (2004), calls on young Brazilian economists to take responsibility for their destiny, consequently contributing to national development. The need for agrarian reform capable of expanding the internal market, the urgency to overcome ideological-cultural dependency, and faith in Brazil are present in this text.
Member of the Brazilian Academy of Letters (1997) and the Brazilian Academy of Sciences (2003), and a candidate for the Nobel Prize in Economics (2004), he died at his home in Rio de Janeiro in 2004. In 2009, the Celso Furtado Library was inaugurated in Rio de Janeiro, housing 7,500 books from the economist’s collection.
