<h3>Introduction</h3>
In the 1980s, something shifted in the operating mode of the global capitalist system. The neoliberal turn arrived marked by policies such as austerity, deregulation and liberalization (Harvey, 2007). Continuing through the 1990s with privatization and internationalization, one of the major features of this turn was the shift in the source of profit. Traditionally the result of the &ldquo;real&rdquo; productive sphere (i.e. trade and commodity production), the accumulation of wealth became increasingly possible through finance: credit, interest, debt. This is the backdrop against which The Takeover of Social Policy by Financialization: The Brazilian Paradox (2017) by welfare economist and scholar Dr. Lena Lavinas takes place.
In her book, Lavinas tells the story of the rise and consequences of the social-developmentalist policies<a href="#ref_1">[i]</a> implemented in Brazil in the 2000s, specifically, between 2003 and 2015 by the Workers&rsquo; Party (Partido dos Trabalhadores [PT]). Social-developmentalism, with its prioritization of consumption as a driving force of economic growth and development, was predicted to bring about &ldquo;redistribution without redistributive conflict&rdquo; (Lavinas, 2017, p. 2). The model was expansionist in nature, translating into higher wages, levels of employment and public spending, which would &ldquo;stimulate consumption, bringing investment, introducing innovations, and boosting productivity&rdquo; (p. 9). At the core of these policies, Lavinas argues, was financialization, through the democratization of finance, or financial inclusion.&nbsp;&nbsp;
<h3>What is financialization?</h3>
A direct consequence of the neoliberal turn, dependent on its policies of liberalization and deregulation of financial markets as well as the privatization of public provisions (p. 505, Lavinas, 2018), financialization is understood by the author as &ldquo;a new dynamic of capitalist relations in which &lsquo;the dominance of financial markets and transactions overshadow production and trade&rsquo;&rdquo; (Soederberg, 2013 in Lavinas, 2017, p. 7). Using a similar definition, it is &ldquo;the tendency for profit making in the economy to occur increasingly through financial channels rather than through productive activities&rdquo; (Krippner, 2012 in Lavinas, 2017, p. 7-8).&nbsp;&nbsp;
In Brazil, Lavinas explains how, in effect, the process of democratizing this system relied on and resulted in the &ldquo;expansion of the financial system to every end, across all levels of society&rdquo; in a process akin to absorption (Lavinas, 2017, p. 9). Leaving &ldquo;no sector unscathed&rdquo;, financialization brought along the generalization of debt through its focus on making especially low-income consumers bankable. Lavinas compares the numbers of these consumers before and after the social-developmentalist policies of the PT: 13.9 million by the end of 2015 compared to a meager 1.9 million in early 2004 (Lavinas, 2017, p. 41). With an unprecedented reliance on credit lines on part of the poor, household consumption and therefore debt also witnessed an unprecedented rise (Lavinas, 2017, p. 48).
<h3>Financialization of social policy&nbsp;&nbsp;</h3>
Lavinas&rsquo;s work, however, does not trace the rise and impact of financialization in general but of the financialization of social policy in particular, as an especially damaging effect of the PT&rsquo;s policies during the terms of presidents Lula and Rousseff.&nbsp;
Lavinas traces the ways in which social policy in Brazil &ldquo;came to be a part of the logic of financialization&rdquo; (Lavinas, 2017, p. 56). That is, how anti-poverty social mechanisms put in place by the PT (such as CCTs and microcredit) were exploited towards the end of financialization, or used as entry-points into the market. One of the primary ways highlighted by Lavinas through which this was achieved is through the &ldquo;bankarization&rdquo;<a href="#ref_2">[ii]</a> of recipients of social cash transfer programs.&nbsp;&nbsp;
For example, Lavinas details the repeated targeting of Bolsa Família beneficiaries in particular &ndash; first, in 2008 under the Banking Inclusion Project (Projeto de Inclusão Bancária, or PIB), which initially aimed at the opening of simple accounts and expanded to offer credit cards and other services and products. The program ultimately failed to attract its target clients, with Lavinas theorizing that this was likely a result of its conditions which obstructed the inclusion of beneficiaries. Despite this, Lavinas writes:
Financing for the acquisition of consumer durable goods was still significantly expanded, even to the poorest. When taking out consumer loans through retail chains to buy home appliances, Bolsa Família recipients are subject to the regular interest rates applied by retailers, which are at around 7&ndash;8 percent per month (nominal) (2017, p. 96).&nbsp;
The second, now successful, attempt to &lsquo;bankarize&rsquo; Bolsa Família beneficiaries came in 2016, when the Brazilian federal government authorized the creation of simplified<a href="#ref_3">[iii]</a> individual accounts that effectively inserted &ldquo;the demonstrably poor population into the financial realm&rdquo; (Lavinas, 2017, p. 95).&nbsp;
According to Lavinas, this progression of social-policy-in-service-of-financialization was the consequence of the global deviation from the International Labor Organization&rsquo;s (ILO) initial model of social protection devised in the 1950s. This model, which championed decommodified social protection, had ensured the separation of access to welfare from income (2017, p. 82).&nbsp; Previously &ldquo;designed to cover a broad array of needs, rather than providing just a bare minimum or at most an elemental structure of benefits'', it began instead to frame poverty as &ldquo;a shortfall that can be resolved through monetary transfers'' (p. 82). The result of this is the distortion of social policy from a &ldquo;mechanism for equalizing opportunities and preventing risks&rdquo; to &ldquo;an instrument for private companies&rsquo; &ndash; especially financial firms &ndash; expansion, accumulation, and profit, in addition to inequalities&rdquo; (Lavinas et al., 2022, p. 15).&nbsp;
The commodification (the conversion of things into monetary value) of welfare manifests in several ways. Part of Lavinas&rsquo;s critique includes the intensified privatization of health and educational services, but also the way in which cash transfers are used as collateral<a href="#ref_4">[iv]</a> in the process of financialization in order to stabilize the rise in consumer credit (Lavinas, 2017, p. 155). She notes how consigned credit<a href="#ref_5">[v]</a> clientele in Brazil use regular income paid by the state (in the form of salaries or social security benefits) as collateral (Lavinas, 2018, p. 510).&nbsp;&nbsp;
A direct consequence of the social-developmentalist model implemented by the PT, argues Lavinas (2017), is the &ldquo;institutionalization of a long-absent connection between credit, on the one hand, and wages and benefits, on the other, with the State serving as the principal underwriter&rdquo; (p. 92). Conditional cash transfers (CCTs) and microcredit/microfinance, both forms of social policy targeting the poor, become tools of absorption into the market: &ldquo;incorporating [...] those who used to be on its margins, forever slipping in and out of inclusion&rdquo; (Lavinas, 2018, p. 507). No longer collateral-lacking and &lsquo;unbanked&rsquo;, poorer individuals become able to access and engage in financial markets, &ldquo;elevated to the condition of consumers&rdquo; ( Lavinas, 2017, p. 78).&nbsp;
With this promotion, the possibility of debt is unlocked: Lavinas (2018) explains that the above mentioned social policy tools further financialization by &ldquo;offering credit as an alternative to fill income gaps&rdquo;, resulting in the encouragement of borrower behavior (p. 508). She calls our attention to the patronizing justification given for this encouragement &ndash; through contracting debt, the behavior of poor individuals and households transforms positively, exhibiting rationality and responsibility (p. 508).&nbsp;&nbsp;
Lavinas takes several issues with this rationale. For one, little attention is given to the way in which borrower behavior could end up producing and re-entrenching poverty through overindebtedness, and how it involves &ldquo;power relationships as well as issues of wellbeing, status and dignity&rdquo; (Gu&eacute;rin et al., 2014, in Lavinas, 2018, p. 508). Lavinas is critical of the narrative surrounding financial literacy &ndash; which promotes the latter as a way to navigate the overindebtedness problem &ndash; describing it as an illusion endemic to financialization:&nbsp;
The antidote to over-indebtedness would lie in promoting financial literacy [&hellip;] an illusion that has gained momentum and may at least partly supplant formal schooling. This explains why central banks within the G20 added to their primary functions of managing monetary policy and guaranteeing financial stability with the aim of promoting financial inclusion, thereby contributing to selling the illusion of economic democracy by means of differentiated and personalized financial services and several modalities of consumer credit. We see central banks involved in promoting financial literacy among welfare recipients, as in Brazil [&hellip;] These programmes, resting on a complex set of rhetorical and regulatory processes, have facilitated and normalized reliance on all sorts of lines of credit, paving the way to the deployment of financialization. (Lavinas, 2018, p. 508)&nbsp;
In addition to this, bankarization of low-income individuals allows the state to evade its responsibility to provide certain services through subsidies and social spending, enabling its performance as a neoliberal state (Lavinas, 2018, p. 509). In her own words:&nbsp;&nbsp;
Savings, insurance and fully funded pension systems aim to instil financial values. Thus, low-income and poor households would be able to &lsquo;invest&rsquo; in education, buy a healthcare premium, start a business, and in so doing provide themselves with a cushion to cope during lean years, instead of depending on state subsidies and other forms of social spending, which run counter to the neoliberal principles of a slim state. (Lavinas, 2018, p. 509)&nbsp;
Lavinas&rsquo;s work on the financialization of social policy in Brazil is careful to contextualize the former as part of a wider, global economic phenomenon. It raises important questions concerning its manifestation in other emerging economies, as they &ldquo;become the destination for massive capital flows in search of higher profitability&rdquo; (Lavinas et al., 2022, p. 8). This is especially the case given the rapid deployment of digital technologies in finance, which she notes &ldquo;increases the periphery&rsquo;s economic and financial vulnerability&rdquo; (p. 8). Rather than assist in the crystallization of this new world, can states play a different role in finance&rsquo;s takeover and commodification of social needs?&nbsp;
<hr>
<a href="#ref_1">[</a><a href="#ref_1">i]</a> The social-developmentalist model is described by Lavinas (2017, p. 53) as the &ldquo;ex-post construction&rdquo; of <a href="https://globaldialogue.isa-sociology.org/articles/on-lulismo">Lulism</a>, explained by Ricardo Carneiro as premised on &ldquo;improving income distribution, expanding economic and social infrastructure, reindustrialization via the consolidation of production chains, and growing the natural resources sector.&rdquo;
<a href="#ref_2">[ii]</a>i.e. access to and use of financial and banking services 
<a href="#ref_3">[iii]</a>i.e. designed for low-income clients with relaxed requirement and no attached fee&nbsp;
<a href="#ref_4">[iv]</a>The definition used by Lavinas (2018, p. 508)&nbsp; is &ldquo;something pledged as security for repayment of a loan; the collateral serves as a lender&rsquo;s protection against a borrower&rsquo;s default&rdquo;.
<a href="#ref_5">[v]</a>Defined by Lavinas (2017, p. 90) as &ldquo;a loan where installments are deducted automatically from paychecks (in terms of those employed, this applies to civil servants and salaried employees) or from retirement plans or death pensions&rdquo;.
<hr>
References&nbsp;
<ul>
<li style="font-size: 10pt;" aria-level="1">Harvey, D. (2007). Neoliberalism as creative destruction. The Annals of the American Academy of Political and Social Science, 610, 22&ndash;44. <a href="http://www.jstor.org/stable/25097888">http://www.jstor.org/stable/25097888</a></li>
<li style="font-size: 10pt;" aria-level="1">Lavinas, L. (2018). The collateralization of social policy under financialized capitalism.&nbsp;</li>
<li style="font-size: 10pt;" aria-level="1">Development and Change 49(2), 502&ndash;517.</li>
<li style="font-size: 10pt;" aria-level="1">Lavinas, L. (2017). The takeover of social policy by financialization: The Brazilian paradox. Palgrave Macmillan.</li>
<li style="font-size: 10pt;" aria-level="1">Lavinas, L., Bressan, L., Rubin, P., &amp; Cordilha, A. (2022). The financialization of social policy: An overview (Discussion Paper 001). Instituto de Economia-UFRJ. <a href="https://www.ie.ufrj.br/images/IE/TDS/2022/TD_IE_001.pdf">https://www.ie.ufrj.br/images/IE/TDS/2022/TD_IE_001.pdf</a>&nbsp;</li>
</ul>
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