2 Constitutional Forecast
2.1 Art. 170 CF/88
2.2 From art. 173 CF/88
2.3 From art. 175 CF/88
3 The business challenge
Honored by the invitation to participate in the first special edition of The Winners Prime Leaders Magazine Economy & Law, I chose to deal with the issue from the perspective of economic duality, thus examining the constitutional system and making an interface with the historical and current contexts.
In general, the constitutional rules of Articles 173 (preferably typical of private law) and those of 175 (preferably governed by public law) forged the duality of the economic initiative, in a clearly market economy, making economic planning mandatory for the public sector, by force of art. 174.
Despite these forecasts, the big problem of the economic issue lies in the fact that, with the rigging of the State by the remarkable incompetence of populist governments and the fantastic wave of corruption they have promoted, the country has been plunged into the crisis from which we will have that fight hard to leave, such the monumental disaster that was the maculation of all the constitutional principles of the Economic Order, leading to bankruptcy numerous companies.
Fact is that, in Brazil, the economic issue always out of this line that, even before the advent of the Citizen Constitution, teachers of economic law had been defending the autonomy of this legal branch, wishing that the expression “economic right” would be included in the Supreme Law.
This aspiration gained strength after the Caraça Charter, the first document on the autonomy of economic law in Brazil, 1977, the result of the 1st Seminar on The Teaching of Economic Law, held at the Federal University of Minas Gerais, in which I was a lecturer.
Masters such as Washington, Geraldo Vidigal, Fábio Nusdeo, Eros Grau and others emerged and the matter was already adopted by some Faculties, myself having assumed, in a postgraduate course Mackenzie, chair with this denomination, at the end of the 70s.
The constituents, in turn, heard the most varied currents and, for the first time, made mention of economic law as an autonomous branch, and art. 174 CF/88 explains the form of greater performance of its standards, either in the face of state participation or in that of private participation.
Also in an attempt at conciliation, they considered that in the legislative competencies of the Federation entities, economic law was in the competing competence of Article 24, item I, with the following wording:
Art, art. 24. It is for the Union, states and the Federal District to legislate concurrently on: I – t a x, fi n a n cial, penitentiary, economic and urban law;
In the chapter of the Economic Order, the position of most of the constituents participating in that Commission should be highlighted, in order to reconcile the principle of the market economy with that of social justice, resulting in the well-written Article 170, composed of two fundamental principles, nine complementary principles and a paragraph of appreciation of entrepreneurship, which did not deserve repair, adding two Constitutional Amendments, which ended up valuing the principled framework of the chapter.
After 31 years of the enactment of the Supreme Law, not only do the Faculties bear the chair ensuring their autonomy, but their study is increasingly intense, by the very interaction of the development of nations, from the economic evolution of each country.
2. Constitutional Forecast
As initially suggested, the Brazilian economic order contains two clear actions of its agents, that is, in the exploration of commercial content activities, including services, and in the provision of public services with density Economic.
In the first, the rules of private law prevail, with the indirect presence of the branches of public law related and, in the second, the rules of public law are more relevant, mainly governed by administrative law, although also with influence indirect private law.
Thus, the entire constitutional economic order is focused on a liberalism-social or a liberal socialism that, in the words of Miguel Reale and Oscar Corrêa, make up the third way of modern economy. So let’s see.
2.1 From Art. 170 CF/88
It was through art. 170 that the 1988 Constitution had the merit of systematizing the 9 essential principles of the economic order and enumerating its 2 foundations (social appreciation and freedom of initiatives), without imposing any conditions that could hinder economic initiative.
Here is, therefore, the article’s diction: Art, art. 170. The economic order, founded on the valorization of human work and free initiative, aims to ensure that everyone is worthy, according to the dictates of social justice, observing the following principles:
I – national sovereignty;
II – private property;
III – social function of property;
IV – free competition;
V – consumer protection;
VI – defense of the environment, including through differentiated treatment according to the environmental impact of products and services and their processes of elaboration and provision;
VII – reduction of regional and social inequalities;
VIII – search for full employment;
IX – treatment favored for small companies constituted under Brazilian law and have their headquarters and administration in the country.
Single paragraph. Everyone is guaranteed the free exercise of any economic activity, regardless of authorization from public agencies, except in the cases provided by law. As it is perceived, the valorization of work, on the one hand, and free initiative, on the other, are the two master pillars of the Economic Order.
Now, for the control of the free initiative, which could unwind into wild and non-social competition, established two poles of permanent surveillance, at the tip of consumption, with the right of the consumer assured, and at the tip of production, with the punishment to abuse of power economic economy, with which, disciplined free competition, could allow the evolution of the economy in an intraumatic way, aiming that competence, in its conduct, prevail over any distortions of those who violate the ethics that must guide the free Market.
The world, in the 21st century, is dominated by technology, competence, efficiency and rapid evolution, and the ideologies, corrupting ideas, serve as manipulation of peoples.
The speed of knowledge is such that the time for technological evolution of a century, in the recent past, today is exceeded in less than 1 year, and in the future, speed will be even greater. Left or right governments will be replaced by efficient or inefficient governments, as the globalization of knowledge will punish inefficient peoples and governments.
In the light of this reality, it can be said that the Constitution of 88, with regard to the Economic Order, is a modern and timeless Constitution, because any of the 9 principles of Article 170, regardless of the speed of development of techniques and practice economic relations, it is adaptable to such evolution and flexible to their emergence.
It is quite true that other realities could impact companies in the future. The tax system, in the circulation of goods and services, could become obsolete, in the face of the globalization of digital trade, such as the reformulation of the media, in which the role is losing importance to new generations, putting into check the edition of newspapers and books, or by the adoption of cryptocurrencies, which can escape the control of central banks, in the face of their multiplication and origin.
The international community is also changing. Their political and economic relations challenge experts. The classic formation that, for centuries, guided the University, begins to give in to the knowledge “online”. Hackers around the world are increasingly numerous, putting on permanent alert all security systems.
In the economic field, the changes are no less significant, but it is true that the universalization of economic relations, in countries that have long ceased to be colonies, gain too much in more relevance, because where it is produced better and cheaper will become the natural waterflow of capitals, whose homeland is the “possible result” and not its “nationality”.
In this environment, in which ideologies fall apart like economic myths, it is recognized that the Brazilian Constitution, in the economic order, had the merit, in its basic principles, of making them flexible and adaptable to the very evolution of humanity, which if it does not self-destruct, in a nuclear war, it can make a leap of integrative quality of all peoples and nations, by virtue of the competitive need for market formation and the universalization of knowledge, in which national barriers will disappear Gradually.
I therefore believe that our Constitution, in the Economic Order, is open to being interpreted with the flexibility necessary for business development in time.
2.2. From Art. 173 DA CF/88
Article 173, in its “caput”, not changed by E.C. No. 19/98, declares that: “Except for the cases provided for in this Constitution, the direct exploitation of economic activity by the State will only be permitted when necessary to the imperatives of national security or the relevant collective interest, as defined by law.”
In the two hypotheses in which the presence of the State in the exploitation of economic activity is authorized (relevant collective interest and imperatives of national security), the normative commands to be followed are typical of private law, broader in the text (170, §§ 1 and 2), and more restricted in the text of E.C. no. 19/98 (173, § 1), since certain rules relevant to administrative law have been expressly required.
It means that the State, about not being able to have any kind of preference in its economic action in relation to the private sector, is only called upon to participate in such a process to supply, complementary, fill areas not met by the most dedicated to such activity, which is that of free initiative.
This vicarious action, without privileges, calls the doctrine “competitive intervention”, in what it seems to me that it has well labeled such secondary participation of the State in the Economy.
It is that the most relevant, in economic law, which deserved the constituent Title separate from the Social Order, is in considering the legal regime in which the partnership of public and private interests are made according to the predominance of interests at stake. When subject to the regime to private law, the participation of the State, I understand, is secondary (173).
However, at no time does Article 173 include the exploitation of public services, but only the exploitation of economic activities – hence the prevalence of private law – emphasizing that § 1, in the drafting of E.C. n. 19/98, refers to: exploitation of activity production and marketing of goods or provision of services without any adjectives.
This is because, repeatedly, the State may intervene in the area of the provision of services or commercialization of goods by relevant collective interest or national security imperatives, without such services or movement of goods being considered public services, such as the case during World War II, in which there was a period of food rationing (milk, bread, etc.).
That is, the constitutional statement signals that imperatives of national security and relevant public interest can constitute exploitation of economic activities that involve services, in the constitutional text, without necessarily being Public.
Free initiative is possible only in the face of free competition (art. 170, item IV) and marked by two mechanisms of curtailment of deviations, which are: at the tip of the production and circulation of goods and services, to the control of the abuse of economic power (art. 173, § 4 c.f.), and at the tip of consumption, protection of consumer law (5th, item XXXII and 170, item V).
The choice for the market economy becomes even clearer in Article 174, the diction of the caput is as follows: Art, art. 174. As a regulatory agent and regulator of economic activity, the State will exercise, in the form of the law, the functions of supervision, incentive and planning, which is decisive for the public sector and indicative for the private sector. (My griffins).
It should be noted that planning is only indicative for the private segment, although mandatory for the public sector, although the legal discipline of incentives and supervision is common to both branches.
2.3. From Art. 175 DA CF/88
The second legal regime for the performance of the State in the provision of public services with economic density, designed is in the “caput” of Article 175 of the C.F., and its discourse is in the following sense: Art, art. 175. It is up to the Public Authorities, in the form of the law, directly or under a concession or permission regime, always through bidding, the provision of public services. (my griffins).
Here, unlike Article 173 (1) clearly, the constituent speaks in public services and not only in services, and this regime of administrative law, and, consequently, the private undertakings which act in it follow the strict rules of that branch of the legal tree.
It means that the private segment can act as an acolyte agent of the State in the provision of public services, which are not confused with the aspects relevant to Article 173. In this case (art. 175, CF), the subordination relationship is predominant in the legal regime of public law, therefore playing the role of “legal stabilizer”, in the formulation of Geraldo Vidigal.
Thus, the legal regime of the public service, with economic density, makes the State the main agent and the private subject mere supporting, by the mechanisms of the concession, permission and authorization.
There is therefore no way to confuse the two regimes. In the first (art. 173), the State acts as vicarious agent in the proper exploitation of private action, governed by rules relating to private law and, in the second (art. 175), is the private segment that can act as an acolyte agent of the State in the provision of public services.
Throughout the foregoing, in general, it is possible to affirm that “free competition” was established for the first time as a fundamental principle for economic development (art. 170, item IV) stimulating, therefore, those dedicated to entrepreneurship, and ending with economic planning, made only indicative for the private sector (art. 174 “caput”).
This balance between those dedicated to the company, the recognition of the state’s lack of vocation for entrepreneurship and the valorization of work, ended up generating the two key articles of the Economic Order: it is up to the private sector to economic initiative, the State is a mere complement, in what does not configure public services (art. 173); it is up to the State to act predominantly in public finances, when providing public services, a field in which it is up to the private sector to be a mere complementtor of state practice (art. 175).
Thus, the constituent outlined well what would be the Economic Order, with a balance between work, capital, the participation of the State and the private sector, in the fields in which they have greater aptitude to act and control abuses in the part of production and consumption, thus underlying the constitutional system of the fair economic order.
3. The challenge of business
The presence of a moderate left and brilliant conservative Constituents, such as Delfim Netto, Roberto Campos and others, in the Subcommittee of Title VIII, led, as already elucidated, to a rule in which the foundations of the Economic Order were launched, eliminating , on the one hand, the abuse of economic power (Article 173 § 4) and, on the other, the exploitation of the consumer (170 item V).
Given the constitutional hit size, the reason why, in Brazil, companies face so many difficulties, in addition to the absence of incentives to business competition, with appropriate tax policies. Three are therefore our main barriers: 1) tax chaos and higher burden than that of our competitors; 2) sclerotic bureaucracy and generating useless obligations that hinder development and 3) even greater labor burdens than those of emerging countries that contribute to us.
Now, for all complex problems, there is always a simple solution, usually wrong. Any unprepared ruler in economics assumes that to get more revenue, it is enough to increase taxation, which, more often, does not generate social justice, development, employment, political stability or development.
I am convinced that the ideal formula to leverage business competitiveness both internally and on the international stage would therefore be the state to debureaucratize itself, reducing its size for society to grow, maintaining policies to avoid abuses of economic power, but controlling their own abuses, over salaries and benefits, in addition to the adiposity of the state machine.
As seen, the economic initiative was well defined in its duality. In other words, essentially originated from the freedom to undertake by society, with rules relevant to private law, although the public authorities may participate in it, in the face of the relevant national interest or for security.
Whenever, however, the economic relationship involves public service provision, the rules will become public law, although the private sector may participate in it, subject to the rules proper to administrative law. The raison d’être of this configuration is very simple: in the Economy, when the state does not hinder it already plays an exceptional role. When it gets in the way, the country can grow.
I believe, therefore, that a simplifying tax reform and a end of bureaucracy of business requirements, with reduction of the administrative machine, would be a good start to regain the competitiveness power of Brazilian companies, more in more smothered by the complexity of such chaotic tax legislation, which ends by generating ghostly infringement records, and a frightening legal uncertainty for whatever the operation to strengthen companies with mergers, mergers, divisions or creation of new technologies, enterprises or products.
This is what it seems that the Bolsonaro Government begins to do not only with the law of economic freedom, but with the package of reformulation of the federative pact.
If we do not start by significantly cutting our government insufficiency, our bureaucracy, our confusing tax system and the weight of our labor legislation, we will certainly see other countries moving on to forward, for we will walk, in strides, to the advance of the setback.
1 – Professor Emeritus of Mackenzie Universities, UNIP, UNIFIEO, UNIFMU, CIEE/Estado DE São Paulo, Army Command and Staff Schools – ECEME, War Superior – ESG and the Judiciary of the Federal Regional Court – 1st Region; Honorary Professor of Southern Universities (Argentina), San Martin de Porres (Peru) and Vasili Goldis (Romania); Doctor Honoris Causa of the Universities of Craiova (Romania) and PUCs-Paraná and Rio Grande do Sul and Catedratic of the University of Minho (Portugal); President of the Superior Council of Law of FECOMERCIO – SP; Founder and Honorary President of CEU LAW SCHOOL.
2 – I appreciate the contribution of my Assistant Ana Regina Campos de Sica, who rescued old texts of mine, assisting me in the preparation of this article.