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Business as Usual Under a Military Regime? Volkswagen Do Brazil and the Military Dictatorship in Brazil (1964–1980)

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Big Business and Dictatorships in Latin America

Part of the book series: Palgrave Studies in Latin American Heterodox Economics ((LAHE))

Abstract

Volkswagen was indifferent to the political regime when it decided to invest in Brazil. The main purpose of Volkswagen’s investment was to develop a highly promising protectionist market in a developing nation. Scared by the potential of a leftward swing in Brazil, the local management and the executives in Germany welcomed the military coup of 1964 as a swing to a business-friendly austerity policy. The firm’s subsidiary Volkswagen do Brazil drew high profits from the suppression of organized labor and the nation’s ensuing economic boom. With the tacit consent of the management, Volkswagen do Brasil’s security force voluntarily collaborated with the Political Police of the dictatorship from 1969 to 1979 and was involved in the arrest of seven political activists.

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Notes

  1. 1.

    Comissão Nacional de Verdade, Relatório, 3 vols., Brasilia 2014.

  2. 2.

    At that time, Volkswagen still was a state-owned enterprise and did not become a joint-stock company (Aktiengesellschaft) until 1960. Even now, the state remains a major shareholder.

  3. 3.

    For the early history of VW do Brazil, see its website (www.vwbr.com/ImprensaVW/page/Historia.aspx). Volker Wellhöner, “Wirtschaftswunder”, Weltmarkt, Westdeutscher Fordismus: Der Fall Volkswagen (Münster: Westfälisches Dampfboot, 1996) is still a fundamental work on the history of VW do Brasil up through the early 1960s.

  4. 4.

    Francisco Vidal Luna and Herbert S. Klein, The Economic and Social History of Brazil since 1889 (Cambridge: Cambridge University Press, 2014), Table A3, 368.

  5. 5.

    Helen Shapiro, Engines of growth. The state and transnational auto companies in Brazil (Cambridge: Cambridge University Press) 1994, 48–51.

  6. 6.

    Wellhöner, Wirtschaftswunder, 272–274.

  7. 7.

    Volkswagen Archive Wolfsburg (UVW), Z 1184, no. 355/3.

  8. 8.

    Werner Baer, The Brazilian Economy. Growth and Development (Boulder: University of Colorado Press, 2008), 55–60: Shapiro, Engines of growth, 52, 142–143.

  9. 9.

    Shapiro, Engines of growth, 145–148.

  10. 10.

    Calculated in accordance with the numbers from Shapiro, Engines of growth, 152–153 and the exchange rate charts of the Institute of Brazilian Business & Management Issues at the George Washington University, Washington D.C. (www2.gwu.edu/˜ibi/database/Exchange_Rate_1954-present.pdf). The peso-dollar exchange rates were converted into DM using the exchange rate statistics of the Deutsche Bundesbank; the average inflation rate was calculated in Baer, Brazilian Economy, 410.

  11. 11.

    Wellhöner, Wirtschaftswunder, 274. Due to inflation and expansions, this estimate from 1956 was certainly lower than the actual costs after completion in 1959.

  12. 12.

    Numbers quoted in ibid., 261, based on the annual reports of VW do Brasil.

  13. 13.

    Ibid., 259.

  14. 14.

    Ibid., 272–273.

  15. 15.

    Ibid., 284–285.

  16. 16.

    Minutes of the VW AG executive board meeting on November 14, 1963, in: UVW, Z 373, no. 455/2.

  17. 17.

    Annual report of VW do Brasil for 1963, in: UVW, Z 174, no. 559/1.

  18. 18.

    In Brazil, illiterate adults were not entitled to vote until 1985.

  19. 19.

    Letter from Schultz-Wenk to Nordhoff, April 16, 1964, in: UVW, Z 174, no. 559/1.

  20. 20.

    Letter from Nordhoff to Schultz-Wenk, May 15, 1964, in: UVW, Z 174, no. 559/1.

  21. 21.

    Letter from VW AG (Novotny/Siebert) to the German Federal Minister for Economic Cooperation, June 11, 1964, in: UVW, Z 174, no. 479/1.

  22. 22.

    Der Spiegel 39/1966.

  23. 23.

    Maria Helena Moreira Alves, State and Opposition in Military Brazil (Austin: Texas University Press, 1985), 51–53; Law 4.330 of June 1, 1964 (www.planalto.gov.br/ccivil_03/leis/1950-1969/L4330.htmimpressSao.htm).

  24. 24.

    Kenneth P Erickson, The Brazilian Corporative State and Working-Class Politics (Berkeley/Los Angeles: University of California Press, 1977), 153–174; Youssef Cohen, The manipulation of consent. The state and working-class consciousness in Brazil (Pittsburgh: University of Pittsburgh Press, 1989).

  25. 25.

    Internal memo from the Economics Department of the VW AG to the Investment Department, July 13, 1973, in: UVW, Z 1199, no. 167/2. Wage statistics from VW do Brasil in response to a query from the General Workers Council (Gesamtbetriebsrat) of the VW AG to VW do Brasil, June 30, 1978, in: UVW, Z 947, no. 662/1.

  26. 26.

    Stern, Oktober 16, 1966.

  27. 27.

    See the Social Report of VW do Brasil for 1982, in. UVW, Z 947, no. 308/1.

  28. 28.

    Statistics from VW AG, International Investments Department I, in: UVW, Z 587, no. 6/229.

  29. 29.

    Overview in UVW, Z 69, no. 345/1. These transfers included dividends and consulting fees.

  30. 30.

    Overview of VW AG, International Investments Dept. I, May 22, 1981, in: UVW, Z 1184, no. 361/2.

  31. 31.

    Minutes of the executive board meetings on August 31, 1972, and June 5, 1973, in: UVW, Z 69, no. 730/1; draft resolution for the executive board meeting on August 21, 1973, in: UVW, Z 1199, no. 167/2; internal memo from the Economics Department to the Investments Department, July 13, 1973, in: ibid.

  32. 32.

    Briefing by the VW AG Investments Department, undated (1973), in: UVW, Z 69, no. 345/1.

  33. 33.

    Analysis of the International Investments Dept. of VW AG about the economic policy of the Brazilian government, June 2, 1980, in: UVW, Z 1184, no. 390/1.

  34. 34.

    Report of Wolfgang Sauer (CEO of VW do Brasil) to Rudolf Leiding (CEO of VW AG), August 24, 1973, in: UVW, Z 1184, no. 577/1.

  35. 35.

    On dependency theory, see Fernando Henrique Cardoso/Enzo Faletto, Abhängigkeit und Entwicklung in Lateinamerika (Frankfurt: Suhrkamp, 1976).

  36. 36.

    Telex from Werner P. Schmidt (CEO of VW do Brasil) to Rudolf Leiding (CEO of VW AG), February 2, 1973, in: UVW, Z 174, no. 576/1.

  37. 37.

    Interview in Süddeutsche Zeitung, February 16, 1972, quoted in Werner Würtele, Auf dem Weg zu einer authentischen Gewerkschaftsbewegung in Brasilien (Heidelberg: Esprint, 1982), 334.

  38. 38.

    “Unser Kapitalismus kennt keine Scham“, Der Spiegel 36/1972, September 18, 1972.

  39. 39.

    Letter from Leiding to the Brazilian congressman Alberto Hoffmann, October 29, 1973, in: UVW, Z 174, no. 577/1.

  40. 40.

    Letter from Leiding to Hoffmann, quoted by Hoffmann in a speech to the Brazilian federal parliament October 10, 1973, in: Diario do Congresso Nacional, p. 7109.

  41. 41.

    Letter from Leiding to Prof. Kurt Hansen (CEO of Bayer AG and chairman of the supervisory board of VW), April 25, 1973, in: UVW, Z 69, no. 286/1.

  42. 42.

    On the collaboration between VW do Brasil and the Political Police, see also the Ph.D. thesis by Marcelo Almeida de Carvalho Silva, “As Práticas de Normalização da Violencia Operacionalizadas pela Volkswagen do Brasil na Ditadura Militar Brasileira (1964–1985),” Rio de Janeiro 2018 (Pontifica Universidade Catolica), pp. 225–256.

  43. 43.

    São Paulo State Archive (AESP), DEOPS inventory, 50-D-007-1393.

  44. 44.

    Report by Rudge to DEOPS, December 11, 1969, in: AESP, DEOPS inventory, 50-Z-030-0822.

  45. 45.

    Jose Casado, “Repressão no patio do fabrica”, O Globo, May 15, 2005.

  46. 46.

    Report by Rudge to the Chief Human Relations Officer, September 9, 1974, in: AESP, DEOPS, 50-Z-341-1135 to 1138.

  47. 47.

    Original title: Volkswagen vista por seus operarios.

  48. 48.

    AESP, DEOPS. 50-Z-341-0610.

  49. 49.

    Information from the Air Force Ministry to the DEOPS, July 21, 1971, in: AESP, DEOPS, 50-D-7-1714.

  50. 50.

    Transcript of Bellentani’s testimony in: Commissão Nacional da Verdade “Vladimir Herzog”, Relatorio Final, São Paulo 2013, 48–51.

  51. 51.

    Letter from Werner P. Schmidt to Rudolf Leiding, September 26, 1972, in: UVW, Z 174, no. 575/1.

  52. 52.

    Memo on the German TV broadcaster ZDF and its documentary “Auslandsjournal” on April 27, 1979, in: UVW, Z 174, no. 2116/2.

  53. 53.

    “Große Luftblasen“, Der Spiegel 16/1979, April 16, 1979.

  54. 54.

    Briefing by Ekkehard Wesner (VW AG Public Relations Dept.) for Anton Konrad (Public Relations Dept.) and Karl-Heinz Briam (Human Relations) on the “Monitor” program on July 3, 1979, in: UVW, Z 174, no. 2716/2; letter from Eugen Loderer (Chairman of the Metalworkers’ Union) to Schmücker, April 30, 1979, in: UVW, Z 1184, no. 355/2.

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  1. Universität Bielefeld, Bielefeld, Germany

    Christopher Kopper

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  1. Area of Economics and Technology, Facultad Latinoamericana de Ciencias Sociales-CONICET, Buenos Aires, Argentina

    Victoria Basualdo

  2. Institute for Economic & Social History, University of Göttingen, Göttingen, Germany

    Hartmut Berghoff

  3. Gies College of Business, University of Illinois at Urbana-Champaign, Champaign, IL, USA

    Marcelo Bucheli

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Kopper, C. (2021). Business as Usual Under a Military Regime? Volkswagen Do Brazil and the Military Dictatorship in Brazil (1964–1980). In: Basualdo, V., Berghoff, H., Bucheli, M. (eds) Big Business and Dictatorships in Latin America. Palgrave Studies in Latin American Heterodox Economics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-43925-5_12

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