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Participatory Budgeting in Porto Alegre: Social Innovation and the Dialectical

Relationship of State and Civil Society
Andreas Novy and Bernhard Leubolt
Urban Stud 2005; 42; 2023
DOI: 10.1080/00420980500279828

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Urban Studies, Vol. 42, No. 11, 2023– 2036, October 2005

Participatory Budgeting in Porto Alegre: Social

Innovation and the Dialectical Relationship
of State and Civil Society

Andreas Novy and Bernhard Leubolt

[Paper first received, June 2004; in final form, June 2005]

Summary. This article focuses on the identification and role of social innovation in urban
development. The aim is to further the understanding of the contradictory relationship between
state and civil society, using a thorough analysis of the process of participatory budgeting in
Porto Alegre, the capital city of Rio Grande do Sul—the most southern state of Brazil. The first
section spells out four different concepts of the relationship between state and civil society and
their implications for social innovation. In the second section, these popular movements are
shown to be embedded in the historically rooted structure of patrimonialism and capitalism in
Brazil. The third section provides an historical analysis of Brazilian popular movements which
represent new key actors in civil society. The fourth section offers a detailed description of the
process of the participatory budget. In the final section, conclusions are drawn about social
innovation in local politics, focusing on the empowering experiments with new public and
democratic forms of the local state accessible to civil society and its interests.

1. Introduction roots. During the 20th century, the constant

tension between capitalism and democracy
This paper aims to discuss recent contri-
butions to the theory of social innovation in was centre stage in an on-going social
urban development, giving special emphasis and political struggle in Latin America
to the role of the state and its relationship to (Lehmann, 1990). To contextualise these
civil society. Referring to Moulaert et al. struggles, we focus on a thorough analysis of
(this issue), social innovation mainly stems participatory budgeting (PB) in Porto
from: the satisfaction of basic human needs; Alegre, the capital city of Rio Grande do
an increased level of political participation Sul, the most southern state of Brazil.
from deprived groups; and, increasing the Our main argument is that PB is a social
socio-political capacity and access to innovation that emerged from an intertwined
resources needed to enhance rights to enable process involving the state and civil society.
satisfaction of human needs and participation. Nevertheless, the majority of scholars over-
However, social innovation is path- and emphasise the role of civil society. Therefore
context-dependent which implies that the in the first section of this paper, we present a
impact of innovative social practices can critique of four conceptions of the relationship
only be understood through a multiscalar between civil society and the state, while the
analysis of its historical and geographical second section describes the main specifics
Andreas Novy and Bernhard Leubolt are in the Department of City and Regional Development, Vienna University of Economics
and Business Administration, Rossauer Lände 23/3 floor, 1090 Vienna, Austria. Fax: þ43 (0)1 313 36 705. E-mail: Andreas.novy@
wu-wien.ac.at and leu@gmx.at.
0042-0980 Print=1360-063X Online=05=112023 –14 # 2005 The Editors of Urban Studies
DOI: 10.1080=00420980500279828
Downloaded from http://usj.sagepub.com at University of Groningen on January 21, 2009
2024 ANDREAS NOVY AND BERNHARD LEUBOLT
of state and civil society in Brazil. Their
contradictory relationship is crucial in under-
standing the PB and in critically evaluating
existing explanations of it. In the fight
against military dictatorship, popular move-
ments entered the public stage as new
actors. During democratisation, they fostered
a socially innovative relationship with the
state. The third section contains a detailed
description of the process of local budgeting
in Porto Alegre. In the final section, we draw
conclusions for social innovation in local poli-
tics, based on the empowering experiments
with new public and democratic forms of the
local state. Thereby, the contribution of PB
to collective learning and empowerment is
given special emphasis.
2. Concepts of the Relationship between
State and Civil Society
Democratisation in Brazil has been widely
discussed as a process creating a new relation-
ship between state and civil society. We
outline four theoretical approaches currently
used to describe this relationship.
The first approach is directly related to
liberal theory. Civil society is mainly referred
to as a self-regulated sphere, autonomous
from the state (Diamond, 1994). The state is
viewed as the institution to secure private
autonomy whereas social innovation stems
from the social capital of civil society
(Putnam, 1993). The latter is often viewed in
a normative sense, identifying civil society
as the ‘civilised society’ of the educated
(Ferguson, 2003).
The second approach is associated with the
republican tradition. Based on the ideal of the
polis of ancient Greece, the citizens gather in a
public space to discuss common problems and
collectively to find solutions. Civil society
acts therefore not outside the state, but is
viewed as constructing the state via the
results of collective discussions by its citizens
(Arendt, 1998). Citizenship is therefore the
central concept of republican theory (Janoski,
1998), focusing on social innovation in the
sense of lessons in democracy learned by
politically active citizens.
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The third approach is the model of the
public sphere as described by Habermas.
Referring to the bourgeois public sphere
which developed in Europe in the 17th
century and counterbalanced the public
sphere controlled by the royal court, he elabo-
rates on the importance of the consensus
created through discursive political action
within non-state spaces (Habermas, 1990). In
this rather idealistic model, civil society is
formed solely by educated actors who gain
influence, but not political power, in the
public sphere. Pressure through public
opinion should force issues to be addressed
formally by the state (Habermas, 1992). Con-
trary to the republican approach, Habermas’
concept does not call for a radical transfer of
power from politicians to civil society but
instead for a strong autonomous civil society
influencing politics via communicative action.
The fourth approach is related to critical
state theory in a Gramscian tradition. While
Jürgen Habermas focused on consensus as
the means of achieving democratic change,
Antonio Gramsci, who suffered from fascist
dictatorship, was well aware that domination
is not only based on consensus, but on coer-
cion as well. Therefore, Gramsci elaborated
his concept of social transformation as a
power strategy to overcome capitalist domina-
tion. For him, the state and civil society
together form an expanded state—i.e. neither
can exist independently from the other. Civil
society is the political realm encompassing
the repressive state apparatus (Anderson,
1976), a contested social space, where differ-
ent interests struggle to assert their points of
view and reach their own goals. Hegemony
is understood as a powerful form of domi-
nance that is more strongly based on consent
than on coercion (Jessop, 1990, p. 217).
Gramsci is not merely concerned with the
struggle for power over the nation-state, but
with a multilayered counter-strategy in
economy, state and society.
Gramsci (1971, p. 129) proposes—alluding
to Machiavelli—a ‘new prince’, a collective
will embodied by the party to aid in building
up institutions within civil society in order to
counter the hegemony of the existing ruling
 PARTICIPATORY BUDGETING IN PORTO ALEGRE
powers, for those in power will not voluntarily
relinquish it. In this way, state coercion must
be employed to dismantle the relations of
domination and to overcome existing socio-
economic inequalities that also exist in civil
society.
The key figures of powers engaging in these
rivalries and clashes are organised interest-
groups, political parties, and social move-
ments, whereas the mass media—more so
than the public sphere—also play a decisive
role in these conflicts in the way they mediate
how total hegemony can be reached in these
arenas (Jessop, 2003, p. 98).
In opposing dominant strategies of ruling
powers, alternative hegemony is concerned
with a step-by-step dismantling of political
society—i.e. of the state in the traditional
sense—and with transferring political power
to civil society. The people are then called
upon to make decisions on the means and
manner of social activities and co-operation
on a local level (Kebir, 1991).
3. State and Civil Society in Brazil
In Brazil, state and civil society have always
been much more intertwined than the liberal
concepualisations suggest (Cardoso, 1993,
p. 117; Roett, 1999). Capitalism was imple-
mented in Brazil by the Portuguese patrimo-
nial state, with the royal court as the centre
of power (Faoro, 1997, ch. 1). In the patrimo-
nial state, power is not exercised according to
rules, but is structured through personal
relationships (Weber, 1970, p. 580ff). With
no rights and thus always at the mercy of the
ruler, society was based on structures of per-
sonal dependency. A direct form of patrimoni-
alism today is ‘clientelism’, in which
politicians and clients exchange favours.
This arbitrary form of political relationship
in the private sphere enables a few to gain
access to state resources while excluding the
many. The Brazilian state was thus treated
as the king’s enterprise, with both public and
private power enmeshed with public and
private property (Fernandes, 1987).
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2025
The dominant segment of civil society is
tightly interwoven with state power while
other segments are systematically excluded
from access to political and economic power
(Novy, 2001). Therefore, the autonomy of
civil society has been quite limited, as the
strengths or weaknesses of civic organisations
have been based on their ability to control
parts of the state apparatus (Fiori, 1995,
p. 101). This is crucial for understanding
Brazilian popular movements in general and
neighbourhood initiatives in particular, both
of which have entered the public stage as
new actors in recent decades.
The end of the 1950s and the beginning of
the 1960s was a period of fervent social
change and mobilisation in Brazil (Skidmore,
1967). In this “irremediably divided society”
(Lehmann, 1990, p. 12), the exploited began
to organise in trade unions, base communities
and rural workers’ associations. A courageous
state-led programme of alphabetisation and
consciousness-raising was started by Paulo
Freire. This specific pedagogical and social
innovation of linking collective learning
to empowerment of the oppressed spread
widely and has influenced political thinking
on education from then on (Freire, 2004).
Social transformation was on the agenda, per-
mitted by an increasingly vital democratic
civil society. But dominant interests—from
the US to local capital, politicians and an
increasingly frightened middle class—
imposed a limit on the range of social
change and democratic organisation. In 1964
a military coup silenced a broad variety of
popular movements, from trade unions to the
landless movement and popular education.
State authoritarianism destroyed democratic
civil society. Parties were dissolved.
At the peak of military dictatorship in the
1970s, people began to raise their voices
again: women started to demonstrate against
the rising cost of living, mothers insisted on
the establishment of nursery schools, citizens
demanded that their streets be paved and
proper sewage systems be installed. New
actors arose on Brazil’s public stage (Sader,
1988), fostering the transition to democracy.
From then onwards, numerous grassroots
2026 ANDREAS NOVY AND BERNHARD LEUBOLT
initiatives emerged particularly on the periph-
ery of cities. These movements, widespread in
Latin America, had much in common with the
social movements that were forming in
Europe at that time (Fuentes and Frank,
1993). One significant difference, however,
was that these popular movements on the peri-
phery were not driven by the middle class
(Castells, 1983), but by the popular mass.
Another difference was that these initiatives
were largely state-oriented, giving priority to
specific demands. These mostly involved
state provision of public services at the local
level, but also addressed other issues, such
as wages and the cost of living. In their fight
against social exclusion, on the one hand,
and political exclusion by the military dicta-
torship on the other, the different social move-
ments formed alliances for democratisation
that led to the formation of political parties.
At the end of the 1970s, a considerable part
of the popular movements joined forces with
trade unionists, Christian base communities
and left-wing intellectuals in an organic
alliance of the popular and middle classes
and founded the Workers’ Party (Partido dos
Trabalhadores, or PT). Its common denomi-
nator was that a return to dictatorship was to
be avoided by a strategy of deep democratisa-
tion of the state, society and the economy.
This political strategy had to go hand-in-
hand with a pedagogical effort towards
public education. Diverse concepts of partici-
patory democracy and republicanism were
fostered and experiments were implemented.
Furthermore, the socialist left insisted on the
importance of overcoming capitalism as a
prerequisite for sustainable and radical
change. A power strategy was pursued that
saw the democratisation of the state as a
gradual transformation from, and annihilation
(Aufhebung) of, the capitalist state.
All four theoretical approaches were
important reference points in Brazil in the
1970s and 1980s as they offered conceptualis-
ations for democratisation in a conjuncture of
the demise of military dictatorship and the
deeply rooted reality of authoritarianism and
patrimonialism (Stepan, 1989). A revival of
republican concepts of citizenship (Dagnino,
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1994; Alvarez et al., 1998) as well as of
Habermas’ theory of the public sphere (Moll
and Fischer, 2000) flared up as the emergence
of public spaces was considered one of the
most significant innovations in local govern-
ance of the 1990s. To sum up these perspec-
tives, Avritzer (2002a) proposes the concept
of ‘participatory publics’, which is charac-
terised by the appropriation of the public
sphere by popular actors in a constant struggle
for the right to satisfy basic needs (Avritzer,
2002a, p. 7, p. 166f).
While liberal and republican theories as
well as that of Habermas focus on learning
and the power of rationality and enlighten-
ment, Gramsci insists on the destructive
force of capitalist domination and the neces-
sity of a power strategy to overcome it.
While the former three theories part from the
assumption that capitalist economy and politi-
cal democracy combine without radical ten-
sions, the latter underlines the necessity of
an overall societal transformation. Creating a
democratic state and an open civil society
will not result in hegemony without the
creation of an alternative economy. It is
within this historical context that participatory
budgeting (PB) came up as a strategy that
aimed at both: advancing rational decision-
making and learning as well as strengthening
a counter-hegemonic strategy to overcome
capitalism (Fedozzi, 2000a).
4. Participatory Budgeting in Porto
Alegre
In Porto Alegre, as all over Brazil, neighbour-
hood movements emerged in the 1970s.
Residents, mainly of irregular, poorer
districts, rebelled against the government’s
lack of interest in acting for their benefit.
Their primary demands were for investment
in urban infrastructure and services as well
as for the autonomy of neighbourhood initiat-
ives. They organised into a municipal associ-
ation underlining their demands by means of
high-profile actions, such as roadblocks.
They linked their material demands to
questions of civic rights, thus embedding
their problems in a larger context. These
 PARTICIPATORY BUDGETING IN PORTO ALEGRE
initiatives were brought together as civil
society mobilised in the course of the protests
against the military dictatorship and also by
the PT. It was within this context that these
movements collectively voiced the demand
to democratise the budget (Fedozzi, 2000a).
Olı́vio Dutra, the PT’s candidate for mayor
in 1988, demanded democratisation and also
called for a turn-around in the distribution
priorities of public budgets to favour socially
marginalised groups. Participatory budgeting
(PB) was to be the means by which this
promise of democratisation of the local state
was to be fulfilled (Abers, 2000; Avritzer,
2002a; Fedozzi, 2001; Navarro, 2002;
Santos, 2002).
4.1 How Participatory Budgeting Works
PB has always been treated as an on-going
social experiment of linking elements of
direct and indirect democracy. PB has never
been understood as a completed finalised
concept, but as one that was to develop
through conflicts, as a step-by-step institutio-
nalisation of popular participation in local
politics, combined with on-going participant-
oriented evaluation and modification of the
process.
Sharing power with the people. After the PT
took office in 1989, the government’s inex-
perience in controlling an administrative
apparatus led to severe financial problems.
Figure 1. Development of the number of participants in PB in Porto Alegre. Sources: Cidade (2005);
Fedozzi (2001, p. 127).
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2027
With only 3.2 per cent of the municipal
budget available for investments and little
experience in planning by the government,
hardly any of the investments decided on in
the first participatory budget were actually
constructed. Frustration led, on the one hand,
to a decline from 1510 participants in 1989
to only 976 in 1990 and on the other, to
confrontational tactics by the movement.
Threatened by these problems, the govern-
ment began to introduce administrative
reforms in order to be better prepared for the
demands of participatory government. They
worked on the co-operation of the different
administrative departments as well as on an
institutional setting (Fedozzi, 2000a).
In 1988, a new constitution was approved
which decentralised resources and responsi-
bilities to the municipalities. A progressive
tax reform further increased distributable
resources leading to a boost in the share of
investments in the municipal budget from
3.2 per cent in 1989 to 11.2 per cent in 1990
and 17.5 per cent in 1991 (Genro and Souza,
1997, p. 26; Fedozzi, 2001, p. 127). The
growing trust of the population in the
democratic budget deliberation process can
be seen in the steadily increasing number of
participants in the various public meetings
since 1989 (see Figure 1).
In terms of the allocation rights and duties,
the Brazilian executive has the responsibility
for setting up the budgetary proposal
whereas the legislature has the final power to
2028 ANDREAS NOVY AND BERNHARD LEUBOLT
accept or reject it (Giacomoni, 2002, p. 53).
Although the municipal council still has the
legal authority to reject budget proposals
prepared by the municipal government via
participatory budgeting, in practice it never
changed the proposals presented by the PB.
The replacement of clientelism with open
and transparent discussions is one of the
main reasons for the high legitimacy of PB
(Santos, 2002; Abers, 2000, ch. 8). The
conflict between the municipal government,
responsible for the PB and the parliament,
where the governing party never had a
majority, has nevertheless been important.
As the legislature is responsible for taxation,
it blocked all further attempts at tax reform
by the executive.
The institutionalisation of participatory
budgeting. An important step in democrati-
sing the budgeting process was its institutio-
nalisation without juridical codification. PB
takes place in an annual cycle. Instruments
of direct democracy are combined with com-
mittees of representatives elected from
amongst the participants. This expands and
decisively strengthens democratic partici-
pation in the local state’s economic policy-
making process. The unique feature of this
model is its participatory decision-making
processes. Therefore, the participants not
only make suggestions but are also respon-
sible for the ranking of the proposed projects
that takes place in assemblies both on a
regional and on a thematic basis. During
this process, the participants of the direct
democratic plenaries vote representatives
from amongst themselves who will take
care of further negotiations with the munici-
pal government. The basic structure of par-
ticipation also includes an annual review
and any modification of the procedural rules
for participatory budgeting. This allows the
committees to adapt constantly to new con-
ditions and allows for an on-going learning
process.
Participatory budgeting is an instrument of
decentralisation that successfully avoids
spatial fragmentation. The city is the sole
local authority in charge of local revenue
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collection. It is, however, divided administra-
tively into 16 areas (regiões) which are the
decentralised units of the PB. Central, trans-
parent and publicly discussed indicators for
the allocation of the local state’s resources
among the areas are decisive instruments in
ensuring distributive equality. In Porto
Alegre, civic participants also contribute to
making democratic decisions on distribution
criteria, as these are not set by any given
administrative or economic principles or
guidelines. Because the distribution criteria
are renegotiated each year, the system is
flexibly adapted to changing needs. The
currently valid criteria for distribution are:
the population of the area (priority grade 2),
the needs of the area in terms of state services
or infrastructure (priority grade 4) and the
investment preferences of the areas (priority
grade 5). The investment preferences are
given the highest priority, because they
indicate the type of government programmes
that are most favoured. The ‘needs of the
area’ criterion has received the second-
highest priority. It favours distribution in
poorer areas of the city, because the need for
urban infrastructure there is usually greater
than in richer areas (Santos, 1998).
4.2 Satisfying Basic Needs
The decisions made within the framework of
PB soon showed positive material effects.
Particularly between 1989 and 1996, the
city’s basic infrastructure markedly improved.
The percentage of households with access to
the sewage network rose from 46 per cent in
1989 to 85 per cent in 1996, and access to
running water rose from 80 per cent to
98 per cent during the same period (UNDP,
2002, p. 81). These investments attracted
significant attention, because
for the first time in history, a mayor agreed
to invest underground. Previously no one
would have ever invested in things you
couldn’t see (Eduino De Matos, PB del-
egate; quoted in Solidariedade, 2003, p. 48).
There were also noticeable improvements
in education, as the number of children in
 PARTICIPATORY BUDGETING IN PORTO ALEGRE 2029

public schools more than doubled between
1989 and 1999. Efforts to satisfy basic needs
were reflected in Porto Alegre’s Human
Development Index of 0.865, which is
among the highest of all the Brazilian capital
cities in 2000 (PNUD, 2003).
Paving roads was ranked among the top
three priorities by the participants until 2001.
First of all, irregular, poor districts were effec-
tively connected to the public transport
system, as the buses no longer got stuck in
the mud during heavy rains (Becker, 2001,
p. 197). The bus stations were located closer
to people’s homes, which allowed children
and adults from poorer districts to get to
school and work more easily. These districts
then became more accessible for waste man-
agement vehicles, police cars and ambu-
lances (Abers, 2000, p. 148). A political
discussion on the alternatives to the use of
motorised private vehicles, however, has not
yet begun.
In a comprehensive study on the redistri-
butive effects of participatory budgeting,
Marquetti proves that a greater amount of
public resources per person is invested in
poorer areas than in richer areas, with the
exception of highly populated poorer areas
that—due to the low ranking of population
as a distribution criterion—tend to be disad-
vantaged. However, steps have been taken to
increase the importance of the population
criterion. The mere possibility of making
such corrections is one of this model’s most
significant social innovations. Apart from the
problem mentioned above, empirical studies
have shown that social groups that have
been largely excluded from public life—par-
ticularly the poor and women—have profited
from the introduction of PB (Marquetti,
2002). The participation rates of deprived
groups of society have also been considerably
higher, as Table 1 suggests. Women’s partici-
pation has been rising from 46.7 per cent in
1993 to 56.4 per cent in 2002 which is
higher than the female population of Porto
Alegre of 53.3 per cent. This represents a
high rate of female political representation
compared with the municipal parliament
where only 21.2 per cent of the delegates in
2004 were women (Camara Municipal de
Porto Alegre, 2004). Other traditionally under-
represented or excluded groups, such as the
Black community and poor people, are well
represented too. Considering that the average
middle-class family in Porto Alegre earns
about 10 minimum salaries (MS) (Marquetti,
2002) it is remarkable that 87 per cent of the
participants had a family income below 8
MS in 2002 and 39.5 per cent below 2 MS.
A change in the average size of investments
in public resources has also been a positive
social effect of PB, as the projects imple-
mented were higher in number and smaller
in size than those agreed upon in traditional
budget allocation procedures. The pursued
development strategy based on the people’s
immediate Lebenswelt not only empowered

Table 1. Participants in the PB (percentages)

Percentage
of total
2002 2000 1998 1995 1993 population
Up to 2 MS 39.5 24.9 30.9 n.a. n.a. 11.4
2–4 MS 29.9 29.3 26.1 n.a. n.a. 19.4
4–8 MS (more than 4 MS) 18.4 22.7 21.1 n.a. n.a. 64.1
8–12 MS 5.1 10.0 9.7 n.a. n.a.
More than 12 MS 6.8 13.1 12.2 n.a. n.a.
No answer on salary — — — — — 5.1
Women 56.4 57.3 51.4 46.8 46.7 53.3
Black 28.1 20.9 n.a. n.a. n.a. 10.9

Note: MS ¼ minimum salaries.

Sources: Cidade (2003); Cidade and PMPA (2002, p. 25); Marquetti (2002).

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2030 ANDREAS NOVY AND BERNHARD LEUBOLT
participants (Abers, 2000), but also paved the
way for a shift in investment priorities,
moving away from large projects (with high
media exposure) towards smaller projects tai-
lored to local structures.
4.3 PB as a Republican School
Democracy
Popular movements split into two groups:
some were mainly conflict-oriented, accus-
tomed to openly confronting the state; others
were clientelist, focusing on obtaining
benefits by direct, personal contacts with
decision-makers, thus excluding the public
from negotiations. From 1989 onwards, the
relationship between local government and
civil society changed due to the democratic
budgeting process. The movements had to
learn to participate actively and publicly in
local politics (Fedozzi, 2001, p. 124ff).
Popular participation in local government
turned out to be advantageous in many
aspects. Through taking part in public dis-
course, individual participants learned to
transform their personal needs into public
interests (Moll and Fischer, 2000). Discus-
sions in the public sphere also served to
broaden appreciation of the needs of others,
thus building solidarity, as Roselaine, one of
the participants, describes
Even I only thought of my own street when
I first took part in participatory budgeting.
But then I met other people and commu-
nities and learned of much greater
problems. What I thought of as a huge
problem was nothing compared with the
situations of some of the others. The ques-
tion of having no place to live, sleeping
under a piece of cloth, or open sewage
close to where the children run and play.
I forgot about my street, so that even
today it still hasn’t been paved (Solidarie-
dade, 2003, p. 105).
It is important to note that the number of local
initiatives in Porto Alegre, in contrast to other
capital cities in Brazil, actually increased in
the 1990s. This can be attributed to the parti-
cularly high motivation of the people to
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mobilise because they were aware that this
would allow them to improve directly their
living situations (Avritzer, 2002b). Another
unique aspect of PB in Porto Alegre is that a
majority of the participants are from the
lower classes. In addition, there is above
average participation from women and ethnic
of
minorities (Baierle, 2002).
The significant transformation—from ‘I’ to
‘we’—can be brought about by participating
in discussions on the direct material needs of
the participants within democratic decision-
making committees (Baiocchi, 2003). Over-
coming a purely individualistic approach and
assuming a community-based perspective
form the core of civic consciousness. As
popular education goes hand-in-hand with
popular movements (Freire, 2003), Benevides
(2001, p. 24) deems the participatory budget a
“school of democracy”.
The people of Porto Alegre are indeed
learning democracy and it has become part
of their everyday lives. At the same time,
the utopia of an alternative society was lost
from sight. Political education and a holistic
perspective on development have rarely
made their way into discussions within PB.
Contradictions exist between the belief in
progress and material growth, on the one
hand, and the quality of life and ecological
development on the other. Paving roads
results in cleaner and more accessible
environments. However, one must not forget
that this enables cars to pass through more
quickly, while children lose these spaces for
playing. The problematic approach to ecology
is even more striking in terms of sewage man-
agement—the expansion of the sewage
network was undertaken without considering
waste water treatment (Abers, 2000; Baierle,
2002, p. 320).
Nevertheless, after 16 years, the response to
the school of democracy has been overwhel-
mingly positive.
(1) Due to the high rate of acceptance among
the population, the amount of participants
in PB rose from from 976 (1990) to
28 907 (2002).
 PARTICIPATORY BUDGETING IN PORTO ALEGRE 2031

(2) Thanks to the constant presence of civic 5.1 Learning Democracy in New Public
organisations, PB advanced to become Spaces
the central form of allocation of public
Deliberative democracy needs concrete
expenditure. Additionally, public forms
spaces, a fact that Habermasian and republican
of lobbying largely put an end to cliente-
interpretations of PB acknowledge (Fedozzi,
lism and corruption.
2000b and 2001; Avritzer, 2002a and 2002b;
(3) The design of the institution was
Gret and Sintomer, 2002). Together, the local
enhanced through the decentralisation of
democracy and the public sphere constitute
planning, allowing for the development
the basis of this discursive model of demo-
of a more democratic administration.
cracy. The discussions in decision-making com-
(4) This was further enhanced by linking the
mittees of PB are reminiscent of Habermas’
administrative reform with the political
ideal type of the critical public sphere.
aim of achieving an effective and just dis-
However, the common learning processes,
tribution of state resources (Santos, 2002).
weighing up of viewpoints and common
deliberations are not solely the privilege of
5. Experimenting with a Public State and the educated middle class, but are a school of
an Alternative Society democracy open to everyone. In the public
sphere, personal interests confront the indivi-
Porto Alegre and its PB became internation-
dual interests of others. Sometimes this results
ally renowned as an innovative, new approach
in a political exchange, while at other times
to urban politics. Its transparent structure
it results in a collective learning process
contributed particularly to curbing clientelism
within which the dialogue of multiple personal
and corruption. Thus, PB received the inter-
interests and opinions crystallises into a
national ‘best practice’ award for local
common interest. This experiment proved suc-
governments at the UN Habitat Conference of
cessful in Porto Alegre, because these public
1996. The main difference between participa-
spaces came alive within a network of organi-
tory democracy in Porto Alegre and partici-
sations and social movements (Fedozzi, 2000a;
pation as an increasingly used policy tool
Moll and Fischer, 2000; Solidariedade, 2003).
lies in the fact that in the latter all crucial
Public spheres are simultaneously local
policy issues remain out of reach for those
governmental spheres, for deliberative democ-
invited to participate (Cooke and Kothari,
racy does not develop beyond the state, but
2001). In the meantime, several variations of
rather comes from within it. The resulting
participatory budgeting have been imple-
more universal citizenship (Dagnino, 2002)
mented in 103 Brazilian cities (Ribeiro and
indicates the importance of republican values
Grazia, 2003) as well as in an increasing
(Winckler, 2000).
number of European cities. The model of
This process was clearly a strategy of a
Porto Alegre differs from most of its counter-
political party (Giacomoni, 1996, p. 185)
parts in its political conception. In Europe, the
which, in the opinion of Navarro, is a
main objective for implementation is the
desire to increase economic efficiency, not to contamination by the clientelist mecha-
change political priorities and the correlation nisms of party politics [which] robs PB of
of power. Participation in decision-making is its potential universalistic nature and
often replaced by mere consultation, which partially undermines its initial proposal
causes a crucial weakening of its empowering for constructing a true non-state public
potential (Pires, 2001, p. 51f; Leubolt, 2003). sphere (Navarro, 2002).
In the final part of this paper, we focus on
what can be learnt from the specific way In line with the liberal approach, Navarro
people participated in Porto Alegre. Delibera- argues that the state and the party must
tion will centre on learning, power, social become weaker before the civil society can
innovation and courage. become stronger. Hence, he fails to recognise
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2032 ANDREAS NOVY AND BERNHARD LEUBOLT
the significance of socioeconomic conflicts of
interest. There has been hardly any media
coverage on PB in Porto Alegre in the past
16 years. The media do not announce assem-
blies, nor do they report on PB, despite the
fact that public participation is the most
well-known trademark of the local govern-
ment of Porto Alegre. Big businesses provides
regular and generous financing for parties that
oppose the PT. Navarro overlooks the
constant risk of destabilisation experienced
by democratisation efforts within the
Brazilian capitalist system, where economic
and political powers are tightly interwoven.
For this reason, we turn to Gramscian
explanatory models that attach greater value
to conflict and power.
5.2 Power Strategies and the Party as a Key
Actor
Participatory budgeting was an attempt to
elaborate an alternative model of governance.
From the very beginning, this strategy
founded its legitimacy in strengthening civil
society—even more so than in the local
forms of socialism during the Margaret
Thatcher era in the metropolitan areas in
Great Britain (see Boddy and Fudge, 1984).
Yet, this should not detract from the key role
of parties as actors in realising hegemonic
projects within their roles as mediators
between the government and society (Jessop,
1990, p. 318f). Through the years, new
forms of participation were assessed. Local
participation continually improved—for
example, through the introduction of thematic
forums in 1996, which led to an increase of
participation among the middle class.
However, public discussion on the problems
of urban development was far from compre-
hensive. Over recent years, democratisation
has no longer deepened and enthusiasm in
the PB meetings has damped down.
Government efforts to change bureaucratic
culture via administrative reform failed, as
did the plans for decentralisation. Participa-
tory decisions have only affected expenditure
and therefore never seriously touched the
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question of local state revenues. A standstill
in democratising the budgetary deliberation
process was identified (Solidariedade, 2003),
highlighting the loss of momentum in the
hegemonic project of a new society. Never-
theless, there were lasting changes to the
form of governance through the institution-
alised participation of civil society.
In spite of democratisation of the state,
economic and social changes in everyday
life were not profound. The rapid ‘Americani-
sation’ (Gramsci, 1971, p. 279ff) of the city
happened to a large degree without open
public discussion—for example, on shopping
centres or road improvement. On the contrary,
the construction of a main road running
straight through the city, financed by the
World Bank, has become a reference project
of the city government. Long-term planning
schemes have followed the example of
Barcelona, focusing more on competitiveness
than on participation (see MacNeill, 1999).
Strategic planning led to a rather sophisticated
process in which very few segments of the
popular classes participated (Abers, 2000;
Moll and Fischer, 2000). The resulting indivi-
dualisation processes brought about cultural
changes which threaten strategies for collec-
tive empowerment.
5.3 Social Innovation and an Open
Democratic State
PB is the core element in a new form of local
governance in which government officials and
the public come together to discuss and col-
lectively plan urban development. Civil soci-
ety did not assert its influence in Habermas’
sense of “besieging without the intention to
seize power” (Habermas, 1992, p. 626); that
means a self-regulated sphere independent
from the state (Fedozzi, 2000b). Gret and Sin-
tomer (2002) identified a co-government role
for civil society and local government that is
expressed in diverse areas and in different
ways. Several smaller decisions, particularly
those made locally and independently, are
taken by self-run civic organisations. By
working together with civic actors, technically
 PARTICIPATORY BUDGETING IN PORTO ALEGRE
experienced government and administrative
workers have also contributed significantly
to raising the level of knowledge of those
actors (Fedozzi, 2001).
The level of democratisation realised in
Porto Alegre by far supersedes that in
European models of governance. Social inno-
vations, in the sense of the ALMOLIN model,
were registered in Porto Alegre on all three
levels (see Moulaert et al., this issue)
(1) Basic needs were met directly. PB partici-
pants primarily took part in meetings to
fight for state investment in their neigh-
bourhoods. Thus, there was an increased
focus on the poorer districts, previously
easily ignored.
(2) The introduction of PB fostered less
authoritarian relations between citizens
and the local government. The rate of par-
ticipation was above average, especially
among poorer people, women and ethnic
minorities—thus, we identify the
inclusion of traditionally disadvantaged
groups as a significant social innovation.
(3) Participation in the public sphere enabled
many participants to overcome their
purely individualistic approaches. More-
over, the public sphere and the commu-
nity gained greater significance. The
outcome of the learning process went
hand-in-hand with material improvements
for those previously excluded, in that their
participation heightened their social
inclusion.
5.4 Radical Analysis: Courageous Strategy
To conclude our reflections on Porto Alegre,
we return to our introductory comments on
the necessity to contextualise social inno-
vation. We offered a deep analysis, radical
in the sense of digging down to the historical
and geographical roots. This allowed an
understanding of PB as a policy implemented
in a specific conjuncture of democratisation
and relative political openness. At that
moment, PT was courageous enough to demo-
cratise the budget, the material core of the
state and to share power with actors in civil
Downloaded from http://usj.sagepub.com at University of Groningen on January 21, 2009
2033
society. However, as Gramsci (1971,
p. 235ff) predicted, the fortress of capitalist
domination is quite resistant to change in
countries with a complex network of protago-
nists in civil society (see Anderson, 1976,
p. 9ff; Coutinho, 2000, p. 172). In 2004, the
Worker’s Party lost the municipal elections.
For 16 years, participatory democracy was at
the centre of the power strategy in Porto
Alegre. Local politicians had the courage to
experiment with a qualitative reorganisation
of the local state. Radical republican sociali-
sation strategies have aimed at empowering
the population to become the owner of its
city. Nevertheless, over this period, a coherent
power strategy for the implementation of an
alternative model of society and economy as
a whole was lost. But the dialectical character
of development does not allow for any degree
of stagnation: a standstill inevitably leads to
regression. PB was a first innovative and
courageous step towards democratisation
and changing power relations, but it was not
followed by any further steps.
Since 2005, the city has been governed by
José Fogaça. PB continues, together with a
range of other newly introduced techniques
of participation. But this wide variety of
arenas for participation weakens the capacity
for participation in general as a means of
collective decision-making. The inherent
tension between a strategy of participation in
clearly delimited areas and projects and an
ambitious strategy of empowerment and
democratisation is definitively resolved to
the detriment of the latter. The window
of opportunity, which opened with democrati-
sation in the 1980s, seems to be closing.
Nevertheless, our reflections help in
gaining important insights into the search for
new models of social innovation: for, in
Porto Alegre, civil society did not organise
itself autonomously to work against the
state, but forged a dialectic unity with
the local state instead. In this light, we can
understand PB as a territorialised synthesis
of state and civil society. It was the specific
conjuncture of democratisation in the 1970s
and 1980s that permitted the PB as a strategy
of collective learning and empowerment. It
2034 ANDREAS NOVY AND BERNHARD LEUBOLT
will be remembered as one of the most inno-
vative models of open and democratic local
government. From a republican perspective,
it was successful: it fostered a public space
for deliberation and achieved advances in
the diffusion of true citizenship and the deli-
very of social and political rights to all. From
a Gramscian point of view, it seemed to have
failed because it was not sufficiently radical:
democratisation of the state was not systemati-
cally used as a step towards deepening social
change. Therefore, dominant groups, histori-
cally hostile to popular participation and
equal access for all, could challenge and
finally defeat the counter-hegemonic strategy.
The promising lesson from Brazil, however,
is that attempts at social innovation, collective
learning and empowerment have been regu-
larly absorbed and defeated, but never silenced
for long. New courageous actors will pick up
the challenge.
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