Volta Redonda’s state corporatism poses problems to economic progress due to stiff structures, loose pluralism, and clashing interests.
Pittsburgh, formerly the steel capital of the United States, had its fortunes plummet with the fall of the American Steel Industry. According to Barbara Ferman (1996), if the cyclical structure of the manufacturing industry always results in employment losses as a long-term trend, Pittsburgh faced its genuine crunch between 1979 and 1988, when 110,000 jobs were lost.
This represents a 44% decrease in manufacturing jobs. As is well known, the private and governmental sectors collaborated in a pattern dating back to the 1940s, guiding the city toward a new service-based, high-tech economy. Even if the results were encouraging, they did not fully compensate for the losses caused by the manufacturing crisis. As Fitzgerald (1988) notes, “the number of jobs created in the service sector has not been sufficient to replace the jobs lost in manufacturing.” Between 1979 and 1986, the Pittsburgh PMSA lost 97,457 jobs in manufacturing while adding 33,304 in the service sector. Even if the service sector could absorb all of the manufacturing workers who were laid off, their wages would be lower. positions in the polarized service sector pay less, have fewer fringe benefits, and are more likely to be part-time than positions in the industrial sector (p. 246). In addition to assessing the success of Pittsburgh’s economic conversion policies, it is worth noting that the city has been promoting growth policies with various goals since the 1940s, including downtown regeneration (renaissance 1), downtown and neighborhood development (renaissance 2), and ways to establish a high-tech economy (strategy 21).
Volta Redonda, once Brazil’s steel capital, shares several traits with the United States’ steel capital, to the point where it was nicknamed the “Brazilian Pittsburgh” for decades.
Volta Redonda holds historical significance as President Getúlio Vargas chose the city in the 1940s to build the National Steel Company (CSN), the largest steel company in the country and continent, as part of the nation’s industrialization efforts.2
CSN, as a state-owned firm integrated in Vargas’ state corporatism, had an important role not only in planning but also in governing the newly established city’s area. Volta Redonda, which was sparsely populated prior to the establishment of its steel factory, would later become the archetypal Brazilian corporate town. Housing, schools, clinics, movie theaters, and clubs were developed alongside the steel mill, providing the urban infrastructure required for this sector to operate. Later, CSN assumed complete responsibility for delivering and maintaining major urban services including as water supply, sewerage, street lighting, housing construction and conservation, and telephone connections. Only in the 1960s did some of these services become the responsibility of City Hall. By this time, the city’s population had grown to 100,000, with the steel mill employing 13,000 people. To a large extent, the city of Volta Redonda might be considered an offspring of the CSN.
Following its construction in the 1940s, the enterprise and the city of Volta Redonda had four decades of consistent expansion. In contrast to US steel corporations, CSN experienced two decades of crises in the 1980s and 1990s, necessitating a major revamp of internal administrative practices and eventually leading to the company’s privatization in 1992. It is worth noting that 8,000 workers were laid off throughout the privatization process, and in 2002, 500
The corporation shifted qualified workers and its administrative headquarters to São Paulo. As a result, the city lost 32,000 indirect jobs, with spillover impacts in the service and retail industries. According to Dulci (2008), between 1996 and 2006, the percentage of workers in Volta Redonda’s industrial sector declined from 37% to 20.6%, resulting in a 20% decrease in worker income. It goes without saying that the move of the company’s headquarters had a more profound impact than simply reducing the number of jobs: it resulted in a relaxation of CSN’s historical attachment to the location, or devotion to the city.Volta Redonda’s manufacturing sector, like that of other steel plant cities, has steadily lost ground to the service sector over the last few decades. Nowadays, services not only employ the most people, but also generate the most additional value in the city. As demonstrated in Table 1, even after the initial layoffs caused by the company’s privatization, the manufacturing sector’s contribution to employment creation continued to decline. In 1996, it accounted for 37% of all jobs in the city; by 2005, that figure had dropped to 17%. Meanwhile, the service sector expanded from 28% to 40% of the city’s employment.
Rio de Janeiro’s Metropolitan Region: Clientelism, Distributive Goods, and Political Disincentives for Growth.
Whereas state corporatism, as demonstrated in the previous section, is an artificial pattern of cooperation among private and public actors that eventually leads to patterns of severe group conflict and weak bridges connecting the market and the state, political machines and clientelist institutions have been more effective in managing and mitigating conflict. It is commonly acknowledged that the “efficient secret” of clientelism is its proclivity to prioritize distributive politics above regulatory and redistributive politics. Furthermore, clientelist political machines are effective at resolving conflict because they initiate simultaneous processes of demand fragmentation and aggregation, which are vertically processed using the logic of individual favors. To a considerable extent, clientelism results in a dual process of group demobilization and accommodation.
Nonetheless, some political machines have been considered as capable of promoting developmental politics. According to Ferman’s study, this was true of Chicago’s political