From the 1950s until the end of the 1970s, the state played an active role in structuring and consolidating the industrial sector in Brazil. However, the high degree and permanent nature of protection for the domestic market, together with insufficient scientific and technological development, produced a largely inefficient, technolo-gically backward and internationally uncompetitive industry. It was able to sell abroad because the system of promotion for exports of manufactures off set the anti-export bias of the protection system. These problems were aggravated m the 1980s, when the state not only stopped orienting industrial development but actually began retarding it.

The objective of this article is to formulate a representation of the prices formation process which is satisfactorily general, and independent of the special characteristics propitiated by an occasional situation of low instability, as is implicit in the particular representation synthesized in the rule of a fixed mark-up over direct costs. First of all, the article presents a synthesis of the main arguments presented by post-keynesians on what the author calls the strategic determination of desired mark-ups. He then set out to recuperate the concept of user costs developed by Keynes and which, in his opinion, is well suited for representing the expectational determination of desired mark-ups. Finally the author proposes an analytical integra-tion of these two determinations, given a set of market and economic structures. This integration is summarized in a general formula for desired mark-ups.

This essay suggests that the external debt of the Latin-American countries should be considered as a form of conflict. This means that the confrontation of relative powers has to be acknowledged. As a conflict, it turns into a process in which the relations of creditors and debtors develop through the establishment of different strategies. Conventional treatment of external indebtedness takes it as a problem and searches for its solution. As such, its nature tends ultimately to be considered as a market phenomenon. Technical and administrative measure are then proposed to cope with the “debt crisis”. But in fact, negotiation becomes the main characteristic of the conflict. A situation of financial deterrence is then created to prevent rupture in international financial flows. The unequal power of the participants fixes the limits of the confron-tation as well as the incentives for cooperation.

This paper compares the Cruzado Plan with the Bresser Plan. Both were price freezes based on the theory of inertial inflation. However, while the Cruzado Plan intended to end with inflation, the Bresser Plan was an emergency plan aimed to cope with the deep financial and economic crisis left by the failure of the Cruzado. It achieved this objective. As to inflation, the authors of the plan expected that the rate of inflation would be back to around 10 per cent in December 1987; the actual rate of inflation in this month was 14 per cent.

Democratic regimes have substituted repressive political regimes in Latin America. They are now confronting extremely serious problems: social inequality, financial crisis, both apparently without solution. The viability of increasing the strength of democracy is the first subject of this paper. The second subject relates to the degree of state intervention under these conditions. It argues that a reduction and a modi-fication of the state structure are taking place. The financial crisis tends to accelerate this process. These two subjects, basis and fragility of democracy and the limits of the state intervention, are analyzed in the light of the derivation theory.