LEXONOMICA 
Vol. 12, No. 2, pp. 211–242, December 2020 
https://doi.org/10.18690/lexonomica.12.2.211-242.2020 
© 2020 University of Maribor, University Press 
Accepted  
20. 10. 2020 
Revised 
1. 11. 2020 
Published 
21. 12. 2020
UDC 
340.155:364(81) 
Keywords 
rule of  
law,  
development,  
social  
injustice,  
endemic  
violence,  
mass  
incarceration. 
ERODED RULE OF LAW, ENDEMIC VIOLENCE
AND SOCIAL INJUSTICE IN BRAZIL 
MITJA KOVAČ & MARCELA NEVES BEZERRA 
University of Ljubljana, School of Economics and Business, Ljubljana, Slovenia. 
E-mail: mitja.kovac@ef.uni-lj.si
University of Ljubljana, School of Economics and Business, Ljubljana, Slovenia. 
E-mail: nevesmarcelab@gmail.com  
CORRESPONDING AUTHOR 
mitja.kovac@ef.uni-lj.si 
Abstract Modern Brazil is plagued by social and 
economic inequalities, endemic violence, crime, and a 
weak rule of law. Once these narratives become 
dependent on each other, all aspects must be worked on to 
change the scenario the country is facing: insecurity, fear and 
a lack of opportunities. This paper argues that the 
unprecedented rise of social injustice in Brazil is not the 
result of short-term measures but is part of its history marked 
by economic and social inequalities extending from its 
colonial past until today and the deficient policies on crime 
that emerged in the mid-1990s. Moreover, the current 
massive incarceration, overcrowding of prisons 
combined with the absence of human living conditions 
is turning the prison system in Brazil into a gigantic, 
perpetual school of crime. Investment in education that 
directly helps to lower the crime rate must be aligned with 
a new, less repressive and more inclusive punitive policy 
so as to induce criminals not to return to their unlawful 
ways. It  is  suggested that Brazil can  only  properly 
develop if efficient legal institutions, the rule of law, and 
criminal sanctioning based on the principles of social 
justice are available to all citizens. 
212 LEXONOMICA.   
 
1 Introduction 
 
It is today abundantly clear that the legal institutional framework matters for long-
term growth and sustainable development (North, 1989; Acemoglu and Johnson, 
2005; Acemoglu et al., 2002; Acemoglu et al., 2001; Rodríguez-Pose, 2013). 
Conventional wisdom states that broad-based inclusive property rights and low-cost 
contracting institutions encourage growth. Societies without a robust rule of law, 
secure property rights and low transaction costs seldom flourish in the long run. The 
question of the extent to which legal institutions really matter for growth and 
sustainable development, and which layers are most crucial for economic growth, 
remains largely unanswered. Most studies examine the impact of legal institutions 
on growth and development at the country level. Such studies tend to focus on 
statistical identification issues and barely shed any light on the relationship between 
legal institutions and economic development (Helland and Klick, 2011). 
 
Aggregate correlations of various measures of legal institutions and economic 
growth can, due to the omitted variable bias problem, not provide much evidence 
on how legal institutions impact growth and sustainable development (Sobel and 
Coyne, 2011). Such comparisons consider different legal systems and histories and 
merely show that factors other than legal institutions are related to economic 
development (Olson, 1984; De Soto, 1989). 
 
The rule of law, as a principle of governance, is also a key to achieving sustainable 
development. A strong rule of law concentrates on adopting sound and fair laws and 
policies and assures that states honour their commitments and work towards 
inclusive and sustainable development (IDLO, 2015; Faure and Smits, 2011). In 
relation to the specific issue of how legal institutions can limit the implementation 
of sustainable practices, the literature emphasises that the rule of law is important 
(Castiglione et al., 2015) along with the EU’s sustainable development strategy and 
associated sustainability reporting practice (Delbard, 2008; Pope et al., 2004). Khan 
(2018) and Rodrick et al. (2004) suggest that the rule of law plays a critical role in 
advancing sustainable development, whereas Aseeva (2018) stresses the role of 
international economic law. In their empirical study, Walker et al. (2008) state that 
environmental legislation is not a triggering factor in sustainable practices being 
implemented by firms. Insightfully, Cooter and Schäfer (2012) coin the “double trust 
dilemma of (sustainable) development” term and argue that sustained growth 
depends on innovation. Developing such innovation requires financial investment, 
M. Kovač & M. Neves Bezerra: Eroded Rule of Law, Endemic Violence and Social Injustice in Brazil 213. 
 
 
in turn implying the problem of trust. They argue that effective (efficient) legal 
systems and legal rules help to bring capital and innovation together and thereby 
boost sustainable development (Cooter and Schäfer, 2012). In addition, in their 
pathbreaking work Trebilcock and Prado (2011) and Ulen (2011) identify the quality of 
legal institutions as the main mechanism driving economic development and growth.  
 
This paper joins this scholarly debate and attempts to show that Brazil can only 
properly develop if efficient legal institutions, the rule of law, and criminal 
sanctioning based on social justice principles are available to all citizens. Namely, 
Brazil’s history is marked by various periods of exploitation, abuse and violence, 
from colonial violence through to today’s institutional violence. Moreover, the paper 
addresses the profound discursive changes made in the field of criminal policies, 
moving from the criminal welfare model (Connolly et al., 2004) to increased 
punishment and suffering from significant interference by the economic model, 
modulating mass incarceration driven by private interests that work in the shadows. 
      
Further, this paper describes how social and economic inequality is a phenomenon 
rooted in the process of political formation in Brazil. The current structural 
inequality passively observed by the Brazilian state directly affects political decisions 
made in the public sphere. Public mismanagement, in turn, generates all manner of 
harm to society and to the democratic rule of law, and is directly linked to the high 
level of violence and human rights violations. The aim of this paper, therefore, is to 
show that: a) social inequality as inherited from the colonial past has had deleterious 
long-term effects and is positively related with the endemic violence in Brazil; b) the 
punitive system and repressive criminal policies used to combat crime have led to 
greater violence across the country; and c) the mass incarceration caused by the 
criminal justice policy in place is also harming the country's economy. 
 
The analysis in this paper is both positive and normative. Moreover, the analytical 
approach employs interdisciplinary dynamic analysis and enriches it with concepts 
used in the economic analysis of law (Wittman, 2006; De Geest, 2011; Posner, 2011; 
Bouckaert and De Geest, 2009; De Geest, 2001).  
 
However, two caveats must be made. The first caveat relates to the scientific 
authority that should be attributed to our findings. The legal and economic 
arguments used are, strictly speaking, not a theory but a method for facilitating 
discussions on the law. The second caveat concerns the scope of this paper. Since it 
214 LEXONOMICA.   
 
is impossible to cover all aspects of the impact of the legal-institutional framework 
on social and economic inequality, this paper focuses on the narratives of Brazil’s 
punitive and constitutional development.    
 
This article has the following structure. The first part offers a general background 
and discusses the theoretical mechanisms at work. The second part presents a 
synthesis of the history of violence and social injustice in Brazil. Part three discusses 
the notorious political violence, social injustice, and mass incarceration that has 
transpired in Brazil and their detrimental effects on development. The fourth part 
investigates the relationship between proper development in Brazil, efficient legal 
institutions, the rule of law, and criminal sanctioning based on the principles of social 
justice. The paper concludes with a set of recommendations. 
 
2. Theoretical mechanisms at work 
 
2.1 General literature 
 
This section details the theoretical framework linking the concepts of the rule of law 
and social injustice with the economic rationale. Specifically, it links them with the 
fundamental economic problem of transaction costs and with the various sources of 
economic growth and sustainable development.  
      
Economists generally construct their growth models on the gains from trade and 
highlight the roles played by specialisation, the division of labour, capital 
accumulation, human capital, entrepreneurship and technology as key factors in 
long-run development patterns. However, while constructing such models they 
ignore the costs of transacting and their potential impact on economic growth 
(North, 2005). Still, as Coase (1960), North (1990), Acemoglu et al. (2005) and many 
other scholars stress, such levels of physical, human capital and technology of 
societies should be regarded as being endogenously determined by differences in 
institutional (i.e. legal) incentive streams. The importance and origin of such legal 
institutions might be embodied by their capacity to generate transaction costs.  
 
The welfare of human society depends on the flow of goods and services, which in 
turn depends on the productivity of the economic system (Coase, 1998; 1994). 
Productivity depends on specialisation, which is only possible if there is an exchange 
of goods and services. Such a voluntary transaction benefits both parties, but 
M. Kovač & M. Neves Bezerra: Eroded Rule of Law, Endemic Violence and Social Injustice in Brazil 215. 
 
 
transaction costs tend to reduce the value of an exchange and both contracting 
parties will want to minimise them. The amount of exchanges which spur allocative 
efficiency also depends, as Coase (1988) and North (1990) argue, upon the costs of 
the exchange1 – the lower they are, the more specialisation there will be and the 
greater the productivity of the system.  
 
From a normative perspective, an efficiency- and welfare-minded policymaker 
should economise on the transaction costs generated by different legal institutions 
to spur and enable sustainable development and economic growth. North (2005) also 
states that “the costliness of information is the key to the costs of transacting, which 
consist of the costs of measuring the valuable attributes of what is being exchanged 
and the costs of protecting rights and policing and enforcing agreements”. He adds 
that it is precisely those transaction costs (i.e. the costs of measurement and 
enforcement) which constitute the sources of social, political and economic 
institutions. 
 
Recent empirical investigations (North and Wallis, 1986; Masten, Meehan and 
Snyder, 1991; McCloskey and Klamer, 1995; Dollery and Leong, 1998; Kovač and 
Spruk, 2016) offer further evidence of the impact/importance of transaction costs 
for the long-term path of economic growth. Hence, to encourage economic growth 
the efficiency- and welfare-minded policymaker should economise on the 
transaction costs created by different legal institutions.  
      
Arrow and Debreu (1954), De Geest (1994), Williamson (1996) and Posner (2011), while 
closely resembling Coase’s concept, insightfully define transaction costs as the costs 
of running the economic system of exchanges – the costs of exchange. For example, 
when Robinson Crusoe was alone on the island, there were no transaction costs – 
as soon as Friday arrived and they started to work together, transaction costs arose. 
Here, one should note that transaction costs are not costs like production costs or 
precaution costs (which Robinson would also have if one aimed to have the optimal 
pollution on his island) but simply the costs of economic exchanges. Coase’s (1960) 
definition of transaction costs actually encompasses ex ante costs (before the 
exchange) associated with the search, negotiation and ex post costs (after exchange) 
of monitoring and enforcement. 
 
1 The costs of exchange actually depend on the institutions in a country: the legal system, political system, social 
system, education system, the culture etc. (Coase, 1998). 
216 LEXONOMICA.   
 
This ground-breaking insight also implies that one of the most important economic 
functions of the law and of an elaborated legal system is the systematic decrease of 
transaction costs (mitigation of the notorious problem of positive transaction costs).  
In other words, in the world of zero transaction costs law and the broad principles 
of the rule of law will be a trivial consideration and will not be needed for achieving 
the efficient allocation of resources and for the operation of the system of economic 
exchanges. However, in the world of positive transaction costs rule of law is a 
necessary precondition for the sole existence of markets, sequential transactions and 
for the smooth functioning of the system of economic exchanges. Economically 
speaking, law might be seen as a sophisticated economic institution that, among 
other functions, also attempts to mitigate the problem of positive transaction costs. 
Moreover, markets, trade, economic exchanges and industrial production can 
seldom flourish in the absence of such a sophisticated legal system and countries 
suffering from the transaction cost problem are destined to poverty, misery and 
social injustice.   
 
2.2 Social justice, development and role of the legal system  
 
Considerable empirical research on the relationship between legal institutions and 
development demonstrates that improvements in the legal system’s operation are 
likely to dramatically influence development outcomes. Kaufmann (2004), for 
example, shows that an improvement in the legal system’s operation by one standard 
deviation from the current levels in the Ukraine to those middling levels found in 
South Africa would lead to a four-fold increase in per capita income in the long run. 
     
In his ground-breaking work on the beneficial impacts of legal reforms, De Soto 
argues that “development is possible only if efficient legal institutions are available 
to all citizens” and regards the law “as the most useful and deliberate instrument of 
change available to people” (De Soto, 1989). He also sees the different legal systems 
as the main explanation for the different development patterns existing between 
industrialised and non-industrialised countries (De Soto, 1989). 
      
Economic literature also suggests that not only is law highly relevant for the 
development of countries, but that particular legal systems do better than others 
(Faure and Smits, 2011; Demsetz, 1968). Moreover, Castiglione et al. (2015) in their 
empirical study reveal a positive double causality relationship between the rule of 
law and income per capita, whereby as income increases, greater respect for the rule 
M. Kovač & M. Neves Bezerra: Eroded Rule of Law, Endemic Violence and Social Injustice in Brazil 217. 
 
 
of law is acquired, and vice versa. They also suggest that the rule of law (and the 
quality of legal institutions) has a negative relationship with pollution, confirming 
that the enforcement of rules is a “conditio sine qua non” for controlling pollution, 
while the reverse causality that pollution influences the rule of law does not hold 
(Castiglione et al., 2015).  
 
2.3 Degraded rule of law as the biggest impediment to inclusive 
 development  
 
Systematic degradation, decomposition of the rule of law and constant political 
undermining and complete ignorance of the legal institutions may be the biggest, 
thus far largely overlooked, threat to the implementation of sustainable practices and 
development in Brazil.  
     
The idea of the rule of law originated in Aristotle’s highly abstract concept of 
“corrective justice,” a theory which Posner (2011 and 2001) describes as a concept 
itself rich in economic significance. Namely, Aristotle argued that “if someone 
engages in wrongful behaviour that disturbs the pre-existing balance of wealth or 
other advantages between himself and another person, to the injury of the latter, that 
person is entitled to some form of redress that will, to the extent feasible, restore the 
pre-existing balance, or in other words rectify the departure from equilibrium caused 
by the wrongful act” (Posner, 2011). This concept of justice “without regarding to 
persons” is also indispensable to efficiency and wealth maximization (Posner, 2011).  
John Rawls identified four elements of the “rule of law” concept: a) law must be 
capable of being complied with by those to whom it is addressed; b) law must treat 
equally those who are similarly situated with respect to a given legal rule; c) law must 
be public; and d) law must provide means for determining the truth of any facts 
necessary to the application of a legal rule (Rawls, 1971). These four elements are 
also central to the previously discussed transaction cost related economic concept. 
The primary function of law is to economize on transaction costs. This implies that 
in the absence of the rule of law transaction costs will be increased exponentially and 
such an increase will sooner or later materialize in the forms of increased social 
inequality, injustice, loss of social wealth, poverty and misery. The second function 
of the law is to alter incentives to achieve socially wealth maximizing behaviour. This 
also implies that the law does not command the impossible, since a command 
impossible to fulfil will not alter behaviour (Becker and Posner, 2009; Posner, 2011). 
Posner (2011) also suggests that the requirement that law must treat equals equally is 
218 LEXONOMICA.   
 
another way of saying that the law must have a rational structure. The more general 
(i.e. general application) the law is, the more difficult it is for the government to 
punish dissenters, exploit unpopular individuals, and engage in other abuses (Posner, 
2011). The economic theory of law is a theory of deterrence and a threat that is not 
communicated (requirement that the law must be public) cannot deter. Economic 
theory also presupposes a machinery for ascertaining the existence of the facts 
necessary to the correct application of a law (Posner, 2001; Shavell, 1993; Shavell, 
2004). Namely, the law’s deterrent effect is weakened if enforced without regard to 
whether the “circumstances are those to which the law was intended to apply” 
(Posner, 2011).      
    
Saying all that, it has to be emphasized that the absence of the rule of law will result 
in a society riven by clientelism, opportunism, moral hazard, clannishness, nepotism, 
adverse selection, social injustice and bribery. 
 
The rule of law is in fact also crucial to all dimensions of sustainable development 
and the implementation of sustainable practices throughout societies and countries. 
Namely, by ensuring stable, transparent legal regimes (law-making and 
enforcement), the rule of law promotes sustainable economic development and, by 
ensuring equal opportunities and access to services, it also promotes social and 
human development (Khan, 2018). By strengthening the legal framework to protect 
the environment (i.e. addressing the problem of negative externalities) and ensuring 
the fair, sustainable management of scarce resources, the rule of law protects our 
planet as well (Khan, 2018). The World’s Justice Project’s Rule of Law Index shows 
that the quality of the rule of law in a country correlates both with its economic 
success and its GDP. Conversely, states with a weak rule of law have lower levels of 
prosperity and social wealth.  
     
In this respect, the literature defines rule of law as a system of rules and institutions 
that constrain the arbitrary use of power (Trebilcock and Prado, 2011; Khan, 2018). 
Moreover, for a legal regime to be effective laws must be clear and capable of being 
followed (Khan, 2018). Still, the legal fabric required to achieve the desired outcomes 
includes not simply the creation of obligations and rights, but also their independent, 
impartial judicial implementation and enforcement (Ogus, 2006). 
  
M. Kovač & M. Neves Bezerra: Eroded Rule of Law, Endemic Violence and Social Injustice in Brazil 219. 
 
 
However, the rule of law does not materialize automatically and without constant 
effort (step-by-step) and maintenance it cannot continue to exist. As Justice Breyer 
from the US Supreme Court once stated: “following the law is a matter of custom, 
of habit, of widely shared understandings as to how those in government and 
members of the public should act when faced with a court decision they strongly 
dislike… that habit and widely shared understanding cannot be achieved without a 
struggle; it is a long gradual development based on experience” (Breyer, 2011). 
       
The operation of the rule of law also requires time, integrity, constant commitment 
and even in a democracy it is not self-evident (Corstens, 2017). It is not a “binary 
concept, one or zero, a case of all or nothing, but instead exists in various degrees 
of quality” (Corstens, 2017). Recently, Brazil has witnessed acts by its government 
that have undermined both the rule of law and democracy. For example, in 2020, 
Jair Messias Bolsonaro, the 38th president of Brazil, at a demonstration argued in 
favour of the military dictatorship that had defended the closure of the National 
Congress. The Federative Republic of Brazil also violated its obligations under 
Article 4 (right to life) and Article 5 (right to personal integrity) of the Federal 
Constitution in episodes like the prison massacres (Massacre nas Prisões, 2017), the 
Osasco Slaughter (Chacina de Osasco, 2006) and the Carandiru Massacre (Massacre do 
Carandiru, 1992). The separation of powers created by the 1988 Constitution and 
established in Article 60, § 4, III, of the Magna Law (Magna Carta Magna) is also not 
being complied with. 
 
In a recent episode, the Supreme Federal Court (Supremo Tribunal Federal) through 
Direct Action of Unconstitutionality 3112 (Ação Direta de Inconstitucionalidade 
3112) disrespected the rule of law and ignored the competencies of the legislative 
power given by the Disarmament Statute, Law 10.826/03 (Estatuto do 
Desarmamento, Lei 10.826 / 03), which establishes that the illegal possession of a 
weapon would no longer be a felony crime. The non-alignment of the sources of 
law also creates regulatory confusion. While concubinage is foreseen by Article 1727 
of the Civil Code (Código civil), the Brazilian jurisprudence still fails to recognition 
of a family entity, disrespecting the democratic principle. Obviously, all such 
practices are directly in breach of the rule of law and in the long term also undermine 
economic growth and prosperity.  
      
  
220 LEXONOMICA.   
 
Greenspan observed that the “rule of law and property rights appear to me to be the 
most prominent institutional pillars of economic growth and prosperity” 
(Greenspan, 2007). Therefore, a strong rule of law is also the most important 
institutional pillar enabling the effective implementation of the agenda for 
sustainability and its goals. In the absence of a strong (quality) rule of law, the long-
run implementation of sustainability goals will be futile and unsuccessful.  
 
3 Social injustice and violence in Brazil 
 
This section offers our conceptual framework that helps explain the current social 
injustice and violence that is rampant in Brazil from the perspective of the 
interrelationship between a history that was born in inequality and the long-term 
consequences for public security and violence. The systematic structural imbalance 
of the Brazilian State, in place since it was formed, legitimises differences in citizens’ 
social and economic spheres. It also leads to a high level of civil and State violence 
aimed primarily at a specific part of the population: the descendants of the enslaved. 
As a result of what might be called this “targeted” discrimination, society as a whole 
is exposed to a level of crime that degrades the quality of life across the country, and 
not only to those enclaves where the targeted population reside. Moreover, discussed 
patterns of social injustice and violence trajectories in Brazil will be, as suggested in 
Chapter 2, a direct materialization of the absence of the rule of law. 
    
3.1 Brazil’s violent history 
 
Brazil has existed as a nation for more than 500 years. Its history shows that its 
people have been shaped by violence and exploitation. Brazil was discovered in 1500 
by an error made in route calculation when Portuguese ships were aiming to reach 
India but by mistake eventually found the coast of Pindorama, as Brazil was called 
prior to the arrival of Pedro Álvares Cabral. 
      
According to historian (Souza, 2006), the colonisation had no consistent concern 
with settlement at the start, and Portugal, which prioritised the East, considered the 
land, still a fragmented territory, as some kind of “security space” for later activities. 
The early colonisation did not ensure unity and several colonising fronts were 
established with independent and isolated characteristics, while lacking in 
communication among each other. 
 
M. Kovač & M. Neves Bezerra: Eroded Rule of Law, Endemic Violence and Social Injustice in Brazil 221. 
 
 
Moog (1964) compared the colonisation of Brazil and the United States, which 
occurred at similar times, showing that while in the USA most settlers were pilgrims 
who came to settle with their family in the new world, to follow their faith and 
cultivate their piece of land, in Brazil explorers came to explore the forests to capture 
the Indians to do slave labour and obtain riches like gold and precious stones for 
trade with Europe. 
      
Without intending to settle in the country to live for any considerable time, due to 
travel fatigue eventually many explorers established small villages in the midst of 
their expeditions, leading to the first cities, without any organisation and intention, 
causing future problems in the infrastructure of cities that developed without any 
planning and only as extraction-facilitating resources. 
      
Due to the early exploitation, the main characteristics of Brazil included an emergent 
miscegenation (many indigenous women were raped to ‘satisfice’ the explorers’ 
sexual needs), income concentration, a high index of indigenous death (for the 
battles that occurred between them and the Portuguese explorers). Later on, the 
Catholic Church arrived in this new land and with the incredible power it then 
possessed put pressure on the empire to not use the indigenous population as slaves; 
they were a propitious people to become new Christians. To compensate for the 
absence of slaves, the empire decided to start purchasing African slaves and, as 
Calligaris (1991: 16–18) writes: 
 
[...] the colonizer was the one who came to impose his tongue on a new land, that is, at 
the same time to demonstrate the paternal power (the father's tongue will know how to 
make another body other than the maternal body) and will exercise it away from dad. 
For perhaps the father only bans the motherland's body and here, far from him, its 
inherited and exported power opens access to a body that the father did not forbid. He 
wields the new earth as one can shake the body of a possessed woman, shouting: Enjoys 
Brazil, awaiting the very enjoyment of the moment when the exhausted woman will fade 
into your hands – definitive proof of the rapist's potency. 
       
As noted, the natives living here were also the target of greed and violence by the 
colonisers, seen to this day through the prism of the scant importance  of this 
segment of the population and the genocide of entire nations of natives. This 
struggle for the rights of Brazil’s first inhabitants is still going on today. Another 
222 LEXONOMICA.   
 
facet of Brazil as a colony in relation to violence was the replacement, for slavery, of 
indigenous labour by the labour of African slaves.  
      
Social and institutional racism in the country arises from this time (when the black 
population was not even considered to be human in the colonisers’ eyes, merely as 
instruments of work, as the property of white men, without rights, opinions or 
appropriate living conditions) and continues in disguised form even today, in the 
shape of the huge economic and social differences between black and white 
individuals. This racism has had and continues to have a direct influence on the 
current violence seen in the country, with a large black prison population and a high 
death toll among young people of African descent. This violence is these days 
aggravated by the serious problem of drug trafficking, drastically affecting the 
country’s poorest areas, such as the well-known “favelas”. 
      
The Brazilian economy in this period was a slave economy, with abolition only 
coming in 1888, the latest occidental nation to abolish slavery, exclusively due to the 
pressure applied by the USA and the British Commonwealth that were seeking new 
markets for their products (the abolition of slavery meant more consumers of their 
products). There were no intentions on the part of those then governing society to 
give the Afro descendants any freedom and much less to provide for their inclusion 
in society, triggering a range of new free men who had not the slightest education, 
no patrimony, no home to live in, suffering from widespread racism and working 
for meagre exchanges since they accepted any kind of payment, even food. It is these 
low wages that allow a slave to find a place to live, in neighbourhoods distant from 
the centre, that is, in peripheral regions. 
      
Shops, basements, tenements and shacks built on city outskirts then become 
alternatives the slave found to build a personal living space regardless of whether he 
could properly control it. 
 
In addition, the slaves were then given the opportunity to manage their own time 
and work rhythm, also allowing those with the same ethnic and cultural origins to 
be reunified (Gomes, 1990: 10). 
      
  
M. Kovač & M. Neves Bezerra: Eroded Rule of Law, Endemic Violence and Social Injustice in Brazil 223. 
 
 
As Brazilian cities developed, different areas within them began to have colour and 
social class. The central neighbourhoods had very high values and were occupied by 
white people in contrast to the peripheral neighbourhoods that were occupied 
illegally by black people. According to Carril (2006: 17), “Study on the growth of the 
city of São Paulo shows how the population grew darker as it moved toward the 
periphery”. This was the key moment when social disparities exploded and is one of 
the biggest reasons for the current social and economic inequality in the country. 
 
3 Social inequality and violence 
 
While analysing data on the most dangerous countries or regions in the world, it is 
easy to trace the connection of violence with especially developing countries where 
the socio-economic inequalities are clearer. These inequalities are a “manifestation 
of an unequal distribution of resources socially, economically and politically” (Wood 
and Carvalho, 1988; Carvalho, 1997). Given the undeveloped research into this 
relationship, a comparative parallel among violence and development will be made 
based on available data. According to the United Nations (2020), Central and South 
America are the most violent regions on the globe, with 20 countries found on the 
list of the world’s 25 most violent countries. As Mexico is also present in 20th place 
on the list, Latin America may be classified as the global region with the highest 
concentration of violence in the world, followed by the African continent.  
      
It is necessary to understand that almost all countries in Latin America underwent 
the explorative and violent process of colonisation and today carry considerable 
baggage of huge socio-economic inequalities, partly due to the heritage of the years 
spent as colonies. With the advent of modernity, cities started to grow and develop 
but were unable to combat the inequalities that have intensified over time and have 
fuelled ever greater violence.  
    
The results of the Gini coefficient reveal that only countries from Latin America and 
Africa hold the top 10 positions of unequal countries. Regions with a higher 
coefficient of inequalities, as are common in Latin America and Africa, are also those 
with a higher incidence of crimes and less public safety. These two results lead to a 
third one: Violence is observed more in developing countries that also have a higher 
index for socio-economic inequality.  
  
224 LEXONOMICA.   
 
Brazil is no exception and has a high index of inequality, with IBGE (Instituto 
Brasileiro de Geografia e Pesquisa) conducting surveys which reveal that the 
concentration of income in the country is appalling: The average income of the 
richest one percent of the Brazilian population is 33.8 times the level of the poorest 
50 percent. A parallel index of social development, and the incidence of crime in 
various city neighbourhoods in Curitiba, reveals the negative relationship between 
these two variables which may be seen on the graph provided in 2017 by Mônica 
Máximo da Silva from the Curitiba Urban Research and Planning Institute (Instituto 
de Pesquisa e Planejamento Urbano de Curitiba) and the co-authors Luiza Alberti 
Torrens, Maria Clara Iura Schafaschek and Vinicius Luigi Miozzo. 
  
The statistical data also allow the identification of a negative relationship between 
social development and crime. The most socially developed regions were those that 
performed worst in the area of crime against the person. The same pattern may be 
identified across Brazil as a whole, with the less social developed population facing 
a high index of violence against the person. 
  
The low socially developed Brazilian population is largely concentrated in the favelas 
and is the most affected by violence. Consistent with this, most of the Brazilian 
prison population is black and poor, which is not surprising because as mentioned 
the poor Brazilian population has a colour: the black population living in the slums. 
  
With public assistance lacking, needs that should be met by the state are not and 
much of the population must resort to the private sphere. Such cases are seen in 
areas like health, education and transportation. The discrepancy in these systems is 
clear and enormous: whereas the private side is advanced and praised internationally, 
the public side lives amid the chaos of inefficient assistance policies. Unfortunately, 
the poorest people in the country cannot afford to rely on the private system and 
are hence at the mercy of the failed system. Thus, access to education, for example, 
is precarious and inefficient, resulting in a lack of education for the population and 
consequently a lack of opportunities for social and economic change. This lack of 
opportunity is a factor driving people into the world of crime. Young people without 
any prospect of social improvement regard crime as a way to survive. This reality 
has become so widespread that trafficking, explained in the next section, is 
considered normal. 
     
M. Kovač & M. Neves Bezerra: Eroded Rule of Law, Endemic Violence and Social Injustice in Brazil 225. 
 
 
Within sociology, it is commonly agreed that the environment influences behaviour 
in society since humans are social beings. The initial mirror of a human being's 
behaviour is the family, which is also where the first human contact takes place, 
followed by relationships established with others through friendship. This 
interaction shapes human thinking about what is right and normal. Thus, a child 
born in a violent environment, with his father involved in trafficking and having 
witnessed deaths in childhood, associates this reality with something normal that 
should be copied.  Even if later in life this child develops the critical sense that 
violent action is wrong, it often is impossible for such a person to escape the criminal 
world because, once entered, many leave only when dead (typically through 
violence), a phrase uttered by criminal gang leaders. 
      
The unreliability of the police is another influence that perpetuates the existence of 
criminal groups in low-income environments. Police in Brazil function poorly as 
they are not well trained. Brazilian police have the dubious distinction of not only 
killing but also dying the most. The constant clashes between the police and 
criminals in the favelas produce a considerable number of stray bullet deaths, leading 
the non-criminal population in that environment to often support the “bad guy” and 
loathe the police. Obviously, this absence of the rule of law has resulted in a society 
riven by clientelism, opportunism, moral hazard, clannishness, nepotism, adverse 
selection, social injustice and bribery. 
 
4 Political violence, incarceration and its detrimental effect on 
 development: towards mass social injustice 
 
4.1 Punitive System, Criminal Policies and Mass Incarceration 
 
There have been two periods of dictatorship in the history of the Federative 
Republic of Brazil. The first was from 1937–1945, and involved the dictatorship of 
Getúlio Vargas called “Estado Novo.” and the second was from 1964–1985, and 
involved the military dictatorship (Ditadura Militar), that initially came to protect the 
country from the threat of communists. In these two periods, dictators held broad 
powers, suppressed freedom, violently repressed opponents, and had limited 
legislative and judicial powers. In the Vargas Era, the National Congress and 
Legislative Assemblies were closed, with Article 37 of the Constitution of 1937 
declaring the President the Supreme Authority:  
 
226 LEXONOMICA.   
 
“The President of the Republic, the supreme authority of the State, coordinates the 
activity of the representative bodies, of superior degree, directs the internal and 
external policy, promotes or guides the legislative policy of national interest, and 
oversees the administration of the country” (Constitution of the Federative Republic 
of Brazil, 1937: Article 73). 
 
In 1939, Getulio Vargas created the Department of Press and Propaganda which 
censored communication. As an instrument of censorship, it aimed for the 
ideological control of society, promoting advertisements about the political regime, 
and blocking criticism. The Military Dictatorship was marked by 17 Institutional 
Acts (Atos Institucionais) – legal diplomas issued by the executive – that 
implemented censorship, the suppression of constitutional rights, political 
persecution, and the repression of those who opposed the military regime. Devoid 
of legal authority, AI-5 (Institutional Act 5) is considered the most repressive of the 
period. Published in 1968, the decree reinforced censorship and torture as standard 
government practices. It also prohibited public demonstrations, allowed the 
president to decree the closure of the national congress, the suspension of political 
rights and the restriction of any public or private right. 
 
After the second dictatorship period had come to an end, a “re-democratisation 
period” commenced with the introduction of a new Constitution that would 
guarantee rights to all citizens. According to Alessandra Teixeira (2006), this process 
of re-democratising the country gave way to an ephemeral period of “politicisation” 
of the prison issue that would support the progressive criminal normative, the 
reform of the Penal Code (Código penal) and the first Law of Penal Executions (Lei 
de Execução Penal). These legal instruments enshrined conceptions of a less 
repressive criminal policy, centred on the reintegrating character of prison and an 
extensive list of rights that were unpublished and ascribed both to accused and 
convicted individuals. This was the first time in the country’s history that civil rights 
had been discussed with respect to all spheres. 
      
These legal instruments activated mechanisms opposed to mass incarceration and 
were triggered by an alternative penal system and the effective progressivity of the 
penal regimes, as well as the autonomy of criminal execution. This last point would 
translate to the choice of the jurisdictional model in the execution of the penalty, 
meaning at that moment the perspective of the insertion of the individual arrested 
in a legal order, granting the individual the “status” of a subject of rights afforded 
M. Kovač & M. Neves Bezerra: Eroded Rule of Law, Endemic Violence and Social Injustice in Brazil 227. 
 
 
with protection. For example, Article 6 of the Law of Penal Executions provides 
that “the classification will be made by the Technical Classification Commission that 
will elaborate the individualizing program and will monitor the execution of the 
deprivation of liberty and the restriction of rights, and must propose to the 
competent authority the progressions and regressions of the regimes, as well as the 
conversions” (Law of Penal Executions – Lei de Execução penal, 1984: Article 6). 
      
Through the humanisation policy of the prisons promoted by then secretary of 
justice José Carlos Dias during the elected government of Franco Montoro in the 
State of São Paulo (1983–1986), he gave effect to the individual rights of prisoners 
– legal assistance, expansion of measures to minimize overcrowding of the prisons, 
interventions aimed at containing tensions within the system such as allowing 
intimate visits for male prisoners – and foresaw the creation of mechanisms also 
capable of giving prisoners a political existence. 
      
Accordingly, measures such as the creation of Solidarity Commissions (Comissões 
de Solidariedade) – committees of directly elected prisoners – and the installation of 
ballot boxes in prisons gave prisoners the possibility (explicitly denied in prison) of 
speech, the right to a voice, in an important subversion of prison existence hardly 
paralleled in history. Such mechanisms provided true channels of representation and 
direct interlocution between the prisoner, the authorities and society in general, 
without the mediation and restrictions of disciplinary power. 
      
The lack of information - concerning the positive effect of democratic measures in 
prisons for the reduction of social violence - aligned with the existing structural 
prejudice with those who pass through the system, forms the concept that prevails 
in the current sphere; that a prisoner should not have the same rights as a free citizen, 
after all, he abdicated this privilege when committing the offence or infraction. 
However, in practice, what is observed is the rebound that non-democratic measures 
bring; it generates even more violence for all, free or imprisoned citizens. 
      
A smarter strategy would be to reintegrate prisoners into society and provide 
opportunities to those who never had them. After all, the environment in which we 
operate shapes much of our thoughts and actions. Following Howard Becker's 
thinking, prisoners are outsiders to those who are not in the prison system because 
they have broken a law described in the country’s penal code. Yet, perhaps from the 
prisoner’s perspective, the population outside the gaol is the group that does not 
228 LEXONOMICA.   
 
adhere to the legislation since the laws enumerated in the penal code do not 
permeate and are not applied in the community where the outsider was raised, while 
the commonly accepted mores in that environment are those imposed by a group 
apart from the country’s legislators. 
 
Implementing educational and reintegration policies for prisoners in the community, 
as opposed to utilizing a strictly punitive system, reduce the possibility of recidivism. 
On the other hand, a state that engages in purely punitive politics encourages 
recidivism as such policies inevitably leave the prisoner with little choice but to 
return to crime after release, either due to financial strains, or, by having been abused 
in the system does not view the law as a solution but instead as the problem. 
      
Unfortunately, both politicians and a large segment of society could not leave their 
own preconceptions to the side and a new criminal policy was then implemented 
that is especially based on repression and institutional abuse. In 1986, a “security 
package” consisting of “tough” measures to combat violence was launched. Its 
implementation in 1987 represented the rise and prevalence of a public security 
ideology explicitly grounded in human rights violations. From the conservative 
element of Brazil’s point of view, policies of repression of crime led to the 
dismantling of the newly constructed legal framework of individual guarantees, 
particularly regarding those who are accused and those convicted. Provisions of the 
Law of Penal Executions were rewritten in line with the new mentality, stating that 
“the classification will be made by the Technical Classification Commission that will 
elaborate the individualizing program of the deprivation of liberty adequate to the 
condemned or provisional prisoner” (Law of Penal Executions – Lei de Execução 
Penal, 2003: Article 6). 
     
The period was also characterised by increased violence, especially in the urban 
environment – both state violence (with the worsening of human rights violations, 
uncontrolled police actions, torture, etc.) and the increase in violent crime observed 
since the 1980s, especially in large cities. At the prison level, human rights defence 
policies were abandoned. These policies led to episodes of prisoners being physically 
abused and sometimes killed, along with a lack of enthusiasm to provide prison 
facilities with even minimally viable physical conditions for the custody of detainees. 
The period was further marked by greater violence within disciplinary practices. 
Earlier criminal articles have become increasingly rigid and incisive, as may be seen 
in Article 52 of the Law of Penal Executions first established in 1984 and amended 
M. Kovač & M. Neves Bezerra: Eroded Rule of Law, Endemic Violence and Social Injustice in Brazil 229. 
 
 
in both 2003 and 2019. The law, which establishes that extra-disciplinary sanctions, 
previously only applied to a convict or prisoner who commits a felony, was extended 
to cases of subversion of internal order or discipline in 2003 (Martins, 2016). In 
2019, the text was redrafted to further intensify the rigidity of the provisions, 
establishing a maximum period of disciplinary sanction of 2 years (previously 1 year). 
      
The prisoners started to be placed in heterogeneous units, which brought many 
apparent masters of certain crimes together. The terrible institutional conditions 
were conducive of the formation of feelings of common injustice and forms of 
mutual support and resistance among inmates (Goffman, 1996). The inmates also 
included in their ranks political prisoners with whom other inmates learned guerrilla 
and organisational techniques. The gathering of criminals including the most 
“dangerous” and “undisciplined” in the same establishment and their later dispersal 
across the prison system in places where their range of action and power of 
mobilisation were multiplied were the key reasons that contributed to the formation 
of the militias that have  come to dominate crime in Brazil’s prisons and beyond 
(Portella, 2018).  
      
With Brazil’s subsequent advent as a cocaine route to Europe, the militias set up a 
drug trafficking scheme especially in the favelas, a region forgotten by public policy 
and the state. In this way, once the area was forgotten by the state, crime in this 
region rose exponentially and the economy became drug-based, known for high 
criminality and easy access to guns. By this time, the militias had created an arsenal 
of imported weapons more powerful than even those possessed by state agents, 
making the fight against crime exceedingly difficult. 
 
As already emphasised, the population’s support for criminal factions and the 
reluctant movement against the police, which is unprepared and relies on abuse of 
violence, is another explanation of why the declared war against crime is so hard to 
win. 
 
4.2 Mass incarceration and economic effects  
 
As argued previously in chapter 2, the absence of the rule of law and subsequent 
explosion of transaction costs will sooner or later result in a society riven by 
clientelism, opportunism, moral hazard, clannishness, nepotism, adverse selection, 
social injustice and bribery. As circumstantial evidence for that claim we offer an 
230 LEXONOMICA.   
 
example of mass incarceration in Brazil. The high level of criminality and the 
punitive policies of repression have seen the number of prisoners in Brazil reach the 
massive number of over 800,000. This phenomenon is called mass incarceration. 
The mass incarceration was exacerbated by the intensification of punitive measures 
which led to longer sentences, causing more prisoners to accumulate at the same 
time in the prison complex. Namely, Article 112 of the Law of Penal Executions 
(1984) was rewritten limiting the potential for social development of imprisoned 
population.   
      
The overcrowding of prisons, combined with the lack of human living conditions, 
make incarceration in Brazil a school for crime. Criminals enter the system and leave 
worse than when they arrived, and with high levels of recidivism, and, according to 
statistical data, committing even more serious crimes. The lack of a reintegration 
policy in society, coupled with the idea that the prison system should only be 
punitive, has resulted  in a situation where it is extraordinarily difficult for released 
inmates to integrate into society as productive members. It is also possible to use 
the term “waste” to describe this unfortunate situation. According to Dubois et al. 
(2009), the usefulness of this large segment of the population is being squandered, 
or wasted, because they are not making contributions to society either while 
incarcerated or upon their reintroduction into society.  They then become a net drain 
on society, often being unable to hold gainful employment, living a life of crime, and 
often committing more aggravated crimes than the ones they were initially 
imprisoned for, and then predictably landing back in a foul prison system that 
repeats this story over and over.   
      
As Schmidtz (2009) warns, there is also the “collateral cost” associated with such a 
dysfunctional penal system. Part of the cost of this system is the impact it has on 
viewers. In this case, the spectators are the people outside of the prison system, both 
those who pay taxes because the portion that is allocated  to the prison system is not 
paid as welfare to society, and also to those who are not yet taxpayers but miss the 
opportunity for these taxes to be invested in areas that would actually bring a positive 
return to society. Brazil's flawed criminal system is costly. Policies should be 
instituted that focus on rehabilitating inmates so, once released from prison, they 
can be successfully reintegrated into society. Such policies not only would benefit 
the prior inmate, directing him away from a former life of crime, into a working 
useful member of society, but obviously benefits society as a whole as this person 
might eventually become an active taxpayer that adds to, not subtracts from, the 
M. Kovač & M. Neves Bezerra: Eroded Rule of Law, Endemic Violence and Social Injustice in Brazil 231. 
 
 
economy. History has unfortunately shown that the absence of such forward-
thinking, proactive policies are in the end short-sighted and lead only to recidivist 
behaviours, to the detriment (and great expense) of all concerned.   
     
In terms of numbers, a study by the Inter-American Development Bank (IDB) 
shows that the cost of crime and violence in Brazil was USD 91.38 billion in 2014, 
or 3.78 percent of that year's GDP. The cost of crime should not be confused with 
the cost of incarceration, even if one is associated with the other. At the same time, 
Brazil spends around R$ 40,000 per prisoner a year, amounting to approximately 
EUR 6.4 billion per year. Yet, in contradiction, at the same time the government 
spends R$ 15,000 per student, namely almost three times less. Studies conducted at 
the University of São Paulo (USP) show that for every one percent more invested in 
education there is a 0.1 percent decrease in crime rates.  
     
Ferreira states that “it is often said that incarceration is a costly activity only in Brazil. 
In fact, the prison system is especially expensive in underdeveloped or developing 
countries, where the prison population is high due to the imprisonment trap, which 
is part of the culture of the repressive organs of these countries, with direct effects 
on the economy” (Ferreira, 2018: 15). Thus, as already explained in Chapter 2, this 
costly, unsophisticated and unequal legal system ends up bringing costs beyond the 
criminal sphere, and together with the transactional cost, they contribute to social 
injustice, inequality and poverty. 
 
5 Towards an improved institutional framework in Brasil 
 
Mass incarceration, social inequality and violence are factors that go hand in hand. 
Thus, there is no point in remedying only one of these factors in isolation. Instead, 
all of them must be addressed in parallel. In theory, they could be treated 
individually, but attacking the situation piecemeal would take decades to have some 
practical effect on society and improve the rule of law in Brazil. Thus, we propose 
the following measures as a way to alleviate and treat the errors and deficiencies of 
the Brazilian system: a) massive incarceration should be stopped; b) investment in 
inclusive policies and systematic implementation of the rule of law principles 
throughout the society should became a governmental priority; and c) there should 
be substantial changes in the tax system. Each of these proposals are analysed in 
more detail in the next sub sections. 
 
232 LEXONOMICA.   
 
5.1 Estopping massive incarceration 
 
Mass incarceration can be considered a "school of crime", or at least an incentive to 
continue living in crime. What should be used as a last resort for punishment, ended 
up being trivialized in the Brazilian system and instead became a central punishment 
measure. Furthermore, the war on crime policy of increasing arrests and 
incarcerating more has not only lessened crime it has increased it. To reverse this 
counterproductive trend, Brazil must urgently adopt policies that will stop 
overcrowding the prison population. According to the National Council of Justice, 
41.5 percent of the prison population is made up of preventive prisoners (still 
without trial). Thus, allowing persons accused of lesser crimes to remain free 
pending trial is an effective (and much less expensive) way of reducing overcrowding 
in prisons.        
      
Still related to the previous theme, the decrease in the preventive population in 
prison would open space for the remaining pre-trial detainees to be separated from 
those convicted. What is more, the condemned could be separated by degree of 
danger. In theory, this is already provided for by law, but it is not done in practice 
due to overcrowding in criminal units. Failure to separate these prisoners is a 
precondition for primary or low-risk convicts to be included in the criminal cycle, a 
conundrum that is difficult to break. 
      
Another limiting factor is that, according to the Brazilian Penal Code, alternative 
penalties (i.e. day fines, community service probation) to imprisonment can only be 
applied to convictions of less than four years. Even so, in practice, alternative 
penalties are rarely used for drug trafficking cases (a crime of greater contingency in 
prison), which makes the likelihood of their application trivial and encourages 
incarceration. Changing such legislation to a more comprehensive one would 
facilitate the prevention of contact between low-risk criminals and major criminal 
factions. As a consequence, the vicious cycle of incarceration and crime could be 
lessened. 
      
Mass incarceration needs to terminate. This practice has been a failure, to the 
detriment of both the inmates and society at large. Incarceration, as a means of 
punishment, should be the last resort, not the first, as it has been. 
 
     
M. Kovač & M. Neves Bezerra: Eroded Rule of Law, Endemic Violence and Social Injustice in Brazil 233. 
 
 
5.2 Investments in inclusive policies and rule of law capacity building 
 
It is useless to change the Brazilian criminal policy if the society itself is at least partly 
responsible for the deviant behaviour of the citizen. Therefore, even if alternative 
penalties are imposed, and there is a decrease in contact between low-risk and high-
risk prisoners, the very environment into which they are inserted will be responsible 
for recidivism. Clearly, the individual must accept culpability and responsibility for 
the criminal act engaged in. However, it is undeniable that the environment and 
culture directly influence the individual's behaviour and decisions. A preventive and 
resocializing prison system will fail to be effective unless the convict's social structure 
of coexistence is aligned.  Thus, public policies must allow even the most 
marginalized members of society access to social and labour market opportunities 
to short-circuit the cycle of poverty and crime. The principal driver to break this 
vicious cycle is education. Although investment in education does not yield 
immediate results, over the long term it unquestionably is the most effective solution 
for reducing social inequality and crime. Thus, public investment in quality education 
(from primary school to university), significantly increases the chances that an 
individual will not participate in crime.  While increased investment in the public 
education system will pay substantial long-term dividends, the question remains how 
to best deal with older individuals and those individuals that currently are in the 
criminal justice system that never received an adequate education.    
      
A viable option is to create an educational quota system. Contrary to what happens 
today, this system must be subjected to a maximum usage time, since it has become 
a way for politicians to obtain more population votes. Thus, politicians stop 
investing effectively in basic education and start to establish racial and economic 
quotas, which have no concrete and long-term effect on society. It is necessary that 
allied to these quotas there is an extensive investment in the educational structure so 
that effective results can be achieved. 
      
In addition, Brazil must take greater public measures to support employability. In a 
country where the fiscal deficit is huge, it is not easy to talk about more spending on 
public works to generate employment. Thus, a viable option is a realization of public, 
private partnerships (hereinafter: PPP), which are already successful in other areas - 
such as health. PPP calls can be conducted to generate both quality service and 
employment. In this way, partnerships between municipal, state and federal 
governments with private companies could establish a tax reduction if a certain 
234 LEXONOMICA.   
 
percentage of workers from a certain region are hired (which in this case should be 
a place with a shortage of job opportunities). Such schemes would not only help 
bolster employment in high risk areas but would also strengthen governmental 
relationships with private companies, benefit the economy and reduce transaction 
costs. For example, the US city of Pittsburgh might be employed as a success story. 
Namely, the local government came up with the idea that any person finishing high 
school could automatically go to a local university/college and it would be paid for. 
This in turn led to a high number of young persons that became qualified for work, 
boosted productive members of society; increased human capital; lowered 
transaction costs; local businesses had a ready work force; and the overall social 
wealth has been increased.  
      
Moreover, substantial investments have to be allocated to the systematic 
improvements of the governing principles of the rule of law discussed above. 
Strengthening the rule of law is a necessary precondition for the operation of the 
system of economic exchanges, and is critical for the prosperity of markets, 
consequent economic progress, social justice and related decrease of poverty. 
Conversely, the absence of the rule of law will continue to result in a society riven 
by clientelism, opportunism, moral hazard, clannishness, nepotism, adverse 
selection, social injustice and bribery. The rule of law is bedrock principle crucial to 
all dimensions of Brazilian development and to the implementation of sustainable 
practices throughout the entire country. Namely, by ensuring stable, transparent 
legal regimes (law-making and enforcement), the rule of law will promote sustainable 
economic development in Brazil and, by ensuring equal opportunities and access to 
services, it also promotes social and human development. 
 
5.3 Changes in the tax system 
 
The objective of the current Brazilian tax system is to reduce social and economic 
inequalities through the concept of redistribution. However, in practice, this does 
not occur. Instead, it creates even more inequalities and places the economic burden 
on the poorest people. This aspect is perhaps the most painful to Brazilian society 
and violates two fundamental principles: the Principle of Isonomy, present in the 
federal constitution, and the Principle of Contributory Capacity, present specifically 
in tax law. According to the first principle, equals must be treated equally and 
unequal ones unequally, in order to create social equality. Moreover, according to 
the second, taxes must be computed for each individual according to their financial 
M. Kovač & M. Neves Bezerra: Eroded Rule of Law, Endemic Violence and Social Injustice in Brazil 235. 
 
 
capacity. In practice, a large part of Brazilian tax is generated from taxes on labour 
and especially on consumption, and not on capital and equity income. In other 
words, tax revenue is largely derived from the sale and purchase of essential 
products, such as food and hygiene products. 
      
This means that in practice when buying essential items, the tax rate 
disproportionately impacts the poorest members of the society, as they are forced 
to spend a much higher percentage of their salary on taxes compared to the rich, 
thereby creating even more economic and social inequality. Imagine, therefore, that 
a large part of the population receives a minimum wage, which is equivalent to 
159.94 euros, or even less if they are informal workers. Imagine also that the 
minimum salary of a state law judge is 4000.63 euros, and these two groups of people 
have the same basic food needs. The tax paid by the poor for a bag of rice (that costs 
at the moment around 6.13 euros) is equivalent to 3.8 percent of the minimum wage, 
while for the hypothetical judge in Brazil this is equivalent to just 0.15 percent. 
      
Despite its theoretical distributive function, two-thirds of national taxes are levied 
not on income (where the country has a proportional system), but on consumption, 
which includes basic food, hygiene and health products. Meanwhile, direct taxes on 
income and property (IPTU, ITR, IR, IPVA, ITBI, ITCD) correspond to 8.2 percent 
of GDP or 24.0 percent of the total load. In addition to the problem of indirect 
taxation being the most prevalent in the country, the study by the Economic and 
Social Development Council shows that IR (income tax), the most important direct 
tax for income redistribution, is poorly organized and used in Brazil. Its degree of 
progressivity, referring to individuals, depends on the number of income brackets, 
on which the tax rates are applied, from the exemption to the maximum taxation. 
Over time, the number of bands and the percentage of aliquots has regressed, and 
at the same time, social inequalities have increased. In the years 1983 – 1985, Brazil 
had 13 income brackets and rates ranging from 0 to 60 percent, with five percent 
intervals. Currently, however, the country has aliquots of 0 percent, 7.5 percent, 15.0 
percent, 22.5 percent and 27.5 percent. The maximum Brazilian tax rate is still far 
below most countries. In this way, it can be concluded that the taxes are clearly 
disproportionate on the poorest and the richest. 
 
"The National Tax System has not fulfilled its redistributive function. On the 
contrary, it has always been a highly regressive and income-concentrating system. 
Taxation in Brazil mainly burdens labour and consumption, while the capital 
236 LEXONOMICA.   
 
and equity income are not taxed according to the capacity of their holders. 
Contrary to developed countries where most of the collection comes from taxes 
on income and wealth, in Brazil, about two-thirds of taxes come from taxation 
on consumption, even from products destined basic survival, such as food, 
medicine and personal care products". (Fattorelli Carneiro, UNAFISCO 
NACIONAL, 2010). 
 
Additionally, the fact that the tax also weighs heavily on labour, companies have little 
incentive to do business in the country. This fact thwarts, rather than encourages, 
new business and entrepreneurship. Those businesses that remain in Brazil tend to 
fire several employees since the cost of having the employee becomes extreme due 
to the fees applied. This increases unemployment in Brazil, causes economic 
retraction, and since the problem has gone unchecked, has led to a continued 
downward economic spiral. This conundrum has served to encourage criminal 
activity. Brazil’s high unemployment rate, especially among poor young people living 
in precarious situations, has forced these marginalized people into a life of 
performing illegal work and activities, especially drug trafficking. According to the 
National Registry of Adolescents in conflict with the Law and the National Registry 
of Justice, about 192,000 adolescents in 2017 were arrested for drug trafficking. 
      
Contrary to its main objective, the tax system is the most significant income 
concentrator in Brazil and is a direct contributor to the difficulties that the country 
faces. The system increases production costs, increases commodity prices, 
discourages employment and compromises competitiveness in Brazil, as well as 
internationally. 
      
For these reasons, changes in the tax system are imperative. The primary reform 
should be to make direct taxation - in particular income taxation - the greatest source 
of tax collection. Additionally, the tax rate on the highest income earners must be 
raised from 27.5 percent. These changes will help facilitate and promote one of the 
objectives of taxation (reduce inequality), and will additionally encourage 
employment and reduce transaction costs. 
  
M. Kovač & M. Neves Bezerra: Eroded Rule of Law, Endemic Violence and Social Injustice in Brazil 237. 
 
 
6 Conclusion 
 
''No one who has been thinking about history and politics can remain oblivious to 
the enormous role that violence has always played'' (Arendt, 1970). 
 
Violence and social inequality are factors embedded in the formation of the 
Democratic State of Brazil, having been inherited from its colonial days. The social 
and economic consequences of this are apparent today, evidenced not only by a high 
concentration of wealth for top income earners but also the asymmetry that exists 
in social opportunities between the relatively few rich and the balance of the 
population. This structural inequality intensifies the level of crime which is being 
ineffectively combated in Brazil, since state policies of high repression and little 
attention devoted to creating opportunities and re-socialisation for the lawbreakers 
has served only to further increase poverty and criminal activities. 
     
In this way, the Brazilian State via its excessively punitive criminal justice policies 
and its weak rule of law is the driving force in its prisons serving only to reinforce 
criminal norms among its inmates, instead of rehabilitating them, and therefore 
indirectly provides incentives for prisoners to return to their unlawful ways upon 
release from prison. The State is also failing in its role as a Welfare State. It does not 
offer quality essential public services, in turn hampering the performance of citizens 
and creating environments even more conducive to crime. The economically 
disadvantaged portion of the population is becoming invisible to the State (out of 
sight out of mind) and only functions to proliferate violence. Brazil’s history is a 
textbook case of a country of inherited violence, social inequality and inefficient 
public management, perpetuated and even exacerbated by poor educational policies, 
a poor criminal justice system and unfair taxation policies, which in combination 
have resulted in the present chaotic situation. The outcomes are seen in the 
economy, shaped by the intense colours of inequality, violence and crime. Once 
these narratives become dependent on each other (as they currently are), all of the 
underlying causes must be must be reformed in tandem for the situation to be 
reversed. Addressing any one of the problems, to the exclusion of others, will only 
lead to failure, which means additional insecurity, fear and a lack of opportunities 
for a majority of the population. Investment in education which, as mentioned, has 
a direct correlation to lowering the crime rate, must be aligned with the creation of 
a new, less repressive and more permissive punitive policy that would discourage 
released inmates from returning to a life of crime. Moreover, the application of these 
238 LEXONOMICA.   
 
new policies must be carried out according to the broad rule of law and human rights 
principles. To reduce social inequalities, apart from a significant investment in 
education, the State must play a more active role in the social sphere. After reforming 
the present tax structure, so that it is not so regressive, and so the very wealthy 
shoulder a greater tax burden as a means of redistributing wealth,  the State must 
make  significantly greater investments in public services with tax receipts. Further, 
considerable investments also must be made in cultural activities. The mentality 
deeply rooted in Brazilian culture that created structural inequality must be combated 
in order to achieve a more just and equal society. As mentality changes, one positive 
development can lead to another as part of what might be called a domino effect. 
That is to say, the adoption and institution of one of these policies causes a positive 
impact on the others. Changes in governmental policies and social attitudes will not 
solve all of Brazil’s problems overnight. Patience and a willingness to stay the course 
over the long haul will be required. After all, repairing difficult problems caused not 
only by Brazil’s historical legacy but also by more recent failures in public policy will 
surely take time and effort.  However, attacking these problems in a comprehensive 
way – through criminal justice reform, tax reform, education reform, public 
spending reforms – rather than by way of piecemeal reforms, will have a synergistic 
effect on Brazil’s economy and social structure, and will help rectify many of the 
problems outlined in this paper.  
 
 
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About the authors 
 
Mitja Kovač is an Associate Professor at the University of Ljubljana School of Economics and 
Business. 
 
Marcela Neves Bezerra is a researcher at the University of Ljubljana School of Economics and Business. 
  
242 LEXONOMICA.