Marco is a self-employed handyman in his mid-30s who moved to the city of Porto Alegre from the Brazilian countryside eight years ago. A primary-school-educated son of a farmer, he’d had few opportunities in his small town and had heard about the city’s generous social services. He borrowed money for bus fare and landed in Porto Alegre, where he found construction work. But when his wages wouldn’t cover rent he headed for one of the squatter settlements on the outskirts of the city. He soon moved in with a companheira who sewed clothes and ironed from home. In time his life became more settled, with incremental improvements to the house, small but growing savings, and brisk business owing to his good reputation in the community. Marco’s story of migration, squatting, and survival was unremarkable—until he attended a local meeting on how the city government should invest its money in the region.

It is not surprising that Brazilians are, by and large, uninvolved in civic life. Their cities are among the most violent, economically unequal, and problem-ridden in the world. While the elite live in fortified enclaves, one fourth of Brazilian city dwellers live in makeshift slum housing, often without access to any social services and dependent on patrons for survival. These settlements, which make up as much as a third of some cities’ populations, share the mistrust and social disintegration that the political scientist Robert Putnam and his colleagues have documented in areas of “low social capital” in southern Italy; in recent surveys Brazilians have registered some of the world’s lowest levels of trust in their democratic institutions.

People like Marco are the most excluded from normal avenues of government decision-making and also the least likely to become involved in formal associations. So Marco—brought to the meeting by one of his neighbors—was understandably skeptical about what it might accomplish. He was told that a nearby squatter settlement had been able to collectively purchase its land title through similar meetings; but he was sure at first that someone had used a connection to a powerful politician. Yet the meeting, crowded and held at a school gym, appeared genuine. The mayor spoke about the budget, and a dozen of the 2,000 participants got in line for the microphone to question officials about previous projects. Later, the whole group elected delegates for the rest of the year. Though he did not understand most of the technical details at that meeting, Marco became a delegate and started to participate week after week, learning the rules of the process known as participatory budgeting from the parade of city officials who attended. At the end of that first year, he and his fellow delegates elected to invest in paving the streets and adding sewers to the district.

Over the years Marco became increasingly involved, bringing many new faces to meetings, helping to start a neighborhood association, and realizing his dream of legalizing the land title to his settlement. Today he and his neighbors are part of a cooperative that collectively owns the titles to the land. And Marco, who had never before participated in a social movement or association, spends hours in meetings every week and can often be found explaining technical details or the exact role of a certain government agency to newcomers.

Participatory budgeting, popularized in Brazil by the Workers’ Party, or PT (Partido dos Trabalhadores), is today practiced in some 200 cities there and dozens of others in Europe, Latin America, and Africa. It has deeply transformed the nature of civic life in Porto Alegre, where one of the first experiments in participatory budgeting was introduced 16 years ago.

By turning over government decisions on investment and spending to local assemblies open to all, participatory budgeting has enabled several thousand Brazilian citizens to make real decisions, to demand accountability, and to monitor the results. The process has become a sort of school of democracy for people like Marco, and an entry into civic life.

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The corruption and cronyism of Brazil’s government is legendary. A recent New York Times article calls allegations of graft in the national leadership of the Workers’ Party the “latest reminder of the unremitting corruption” that has marked the region since colonial times. But among progressives, Brazil is also known for political innovations such as the landless movement and the World Social Forum, a global summit for social-justice activists, as well as participatory budgeting.

In spite of the crisis in the Workers’ Party national leadership, experiments in direct democracy by local progressive administrations—including the governments of the state capitals of Belo Horizonte, Porto Alegre, and Belém—continue to inspire onlookers from afar. These cities work. Some have achieved levels of social-service provision almost unheard of in Brazil, including near-universal clean water and sewers and very high rates of preschool enrollment.

The design of the participatory institutions is clever, enticing the least advantaged to participate by combining an educational component with opportunities to win vital improvements for the community. Unlike the delegated decision-making of representative democracy, direct participation requires active intervention that in effect trains people for citizenship through problem-solving, communication, and strategizing. But the achievement with the greatest lessons for progressives elsewhere is the transformation of the relationship between the government and the governed.

Critics of direct democracy say that it is messy, inefficient, and prone to domination by an articulate few. Defenders note the deficiencies inherent in representative systems and point to instances when direct democracy produces good decisions, such as privileging the use of municipal resources to meet the needs of the poorest. In Brazilian cities, this marks a dramatic break with the patronage-driven politics that has long dominated municipal finance. Having thousands of ordinary citizens voice opinions and observe the process increases transparency, taps into local sources of information, and improves the accountability of elected officials. And by allowing citizens to directly influence the allocation of resources in their communities, participatory budgeting energizes citizen engagement and strengthens civil society.

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Participatory budgeting was haltingly introduced in Porto Alegre in 1990 by an inexperienced and besieged Workers’ Party administration, elected just one year earlier and in search of legitimacy. The idea goes back to the 1970s and the social movements that would eventually usher in democracy in the mid-1980s. Radical popular educators and progressive clergy in these movements emphasized the importance of autonomy and participatory democratic procedures; throughout the country citizens formed neighborhood associations and social movements to demand a voice in such local affairs as transportation, health, and housing. The Workers’ Party itself was founded in the early 1980s as a party through which movements could speak.

In Porto Alegre, activists from neighborhood associations started demanding direct input into the city budget in 1985. Through a process of trial and error, participatory budgeting evolved into a year-long cycle of meetings that allow participants to decide on projects in their own neighborhoods as well as for the city as a whole. Citizens took over many functions usually reserved for bureaucrats: setting city-wide spending priorities, planning investments, and reviewing payrolls, not to mention setting the rules for the participatory budgeting process itself and monitoring its outcomes. Because since the 1990s Brazilian cities have assumed responsibility for most social-service provision and infrastructure investments, citizens are able to exert significant control over transportation, education, public health, and public works.

The process begins in March of each year with district-level assemblies in each of the city’s 16 districts, followed by meetings of delegates elected from each assembly who deliberate about the district’s needs and specific projects. By the end of the year, projects and priorities are passed on to the Municipal Council of the Budget, made up of representatives from each district, who then reconcile demands with available resources and propose and approve a municipal budget in conjunction with members of the administration. The municipal legislature then votes on the budget, which is usually approved without modification. As the projects are implemented, street committees monitor their progress. Near the year’s end, participants re-draw the rules of the process for the following year based on their experience.

A significant portion of the annual municipal budget (between nine and 21 percent of the total) is decided in this way, funding hundreds of projects with a completion rate of nearly 100 percent. These projects have achieved almost full water and sewer coverage, a threefold increase in the number of children in municipal schools, and significant increases in the number of new housing units provided to needy families. Porto Alegre’s expenditures in certain areas, such as health and housing, are much higher than the national average, yet the municipalities’ administrative costs and overhead have declined over the years. And Porto Alegre has managed a redistributive regime that is fiscally responsible and that has remained transparent. International institutions such as the World Bank have again and again praised it. Preliminary results of a national analysis conducted in the late 1990s show that participatory budgeting tends to lower poverty rates and improve education.

The rate of participation in participatory budgeting in Porto Alegre is also impressive. Once the process started to show results—three or four years after its introduction—the number of participants grew dramatically. By 2004, some 20,000 were attending the first round of meetings, many of them for the first time. A conservative estimate is that ten percent of adults in the city have at one point participated.

Participants, by and large, are like Marco: they lack secondary education, work in manual or service jobs, and earn well below the city average. Women and Afro-Brazilians participate at high rates, as do residents of poor areas. Marco’s district consistently turns out very high numbers of participants, despite the fact t hat they are the least experienced in civic life. In fact, the activation of civil society in neighborhoods such as Marco’s has reversed a historical trend and should be considered one of the most significant consequences of participatory budgeting.

Scholars have long agreed that organized collectives are best able to meet collective needs, but they have also noted that those most in need are often the least able to organize. In the case of urban Brazil, government has long frustrated efforts to found and maintain associations organized for the collective good; associations seeking a particular improvement would often come into open conflict with local governments and afterward have a difficult time sustaining themselves. It is for this reason that in Porto Alegre and elsewhere in Brazil, poor people’s neighborhood organizations have often been little more than electoral corrals for charismatic politicians who selectively made improvements in exchange for voter loyalty.

In the late 1980s Marco’s district of 20,000 had only two active associations, both connected to powerful political figures. Today it has almost 20, all working through the participatory budget. In Porto Alegre as a whole, the number has doubled since 1989, with the biggest increase in the city’s poorest areas. And while in the past the main activities of neighborhood associations and civic groups were protests and petitions, today these associations are most likely to organize around deliberative and pragmatic problem-solving rather than protesting or mobilizing for a powerful politician. The strong educational component of the process means that local associations and civic life constantly draw new participants.

The way that decisions are made in participatory budget meetings marks a real break from past models of civic engagement. Participants spend a fair amount of time in deliberative discussions. Though most decisions are made through votes, significant deliberation, in meetings and at the edges of official forums, paves the way for them. This complex process is spread out over a year, and participants regularly resolve conflicts over priorities. A district like Marco’s could choose to divide available funds into many small projects, such as paving 100 meters of dirt road in each of the 20 settlements, or spend them all on a major collective priority, such as a thoroughfare or a school. Arriving at a decision sometimes involves tense moments and much negotiation. Active participants such as Marco play key roles in creating solutions and finding ways to balance the needs of neighborhoods and the whole district.

Beyond providing a forum to choose projects and priorities, participatory budget meetings enable other forms of collective action and discussion. Government-sponsored meetings on the technicalities of street-paving projects would seem at first unlikely places for discussions of, say, the setting of poor urban peripheries. Yet in the meetings, participants regularly carve out these spaces for open-ended discussion. People come together in a regular meeting place and address all kinds of needs, fashioning a language of public responsibility and rights that evolves from their work together. Participants bring newspaper clippings to meetings to discuss current affairs; they recruit volunteers for outside projects; they organize protests, some aimed at the administration itself. The participatory budget has been so successful at drawing participants and delivering results that administrators have accepted these other discussions as healthy democratic discourse. For many participants, like Marco, budgeting meetings have become a central part of community life, a place “where the whole community is present” and where “you can discuss a wide range of issues, not just the budget.”

It is in these ways that participatory budgeting affects, and ultimately shapes, civil society and civic practice. Much of democratic theory, and much of the policy discussion in the United States today, assumes that democratic influence travels from civil society toward the state. A well-organized and virtuous civil society oversees state institutions and prevents them from falling into corruption. To foster democracy, in this view, is to strengthen the ways that citizens help themselves. But the participatory-budgeting story shows us how reforming the state—by radically increasing its openness to the public mandate—can shape the way civil society functions. A state that is closed to all but the demands of the politically sympathetic creates incentives for cronyism and militancy. A state that responds to direct participation creates incentives for civic organization. In the case of participatory budgeting in Porto Alegre, state reforms have created incentives for the participation of the poor by focusing on basic infrastructure.

Here the state has created not only incentives but the conditions that enable the poor to participate. There is a pedagogical component built into participatory budgeting. By attending meetings and making demands, new participants learn all the skills required for collective action, such as how to run a meeting and how to negotiate compromises. They learn the intricacies of governmental affairs, previously the privileged domain of policy experts. Perhaps most importantly, in a country where the “masses” have traditionally had no voice but to consent to leaders, participatory budgeting asserts the value of their voice.

After the Workers’ Party introduced and established the participatory budget in Porto Alegre, the process was exported to dozens of other municipalities throughout the country. By 1992, a dozen Workers’ Party municipalities had participatory budgeting; by 1996 the number had increased to 36. And as the Workers’ Party continued to increase its electoral strength and regional presence, participatory budgeting spread throughout the country. Over 100 municipalities experimented with it between 1997 and 2000, and at least 200 did so between 2001 and 2004, at least half of which were run by other political parties.

Given its accomplishments, it came as some surprise that the Workers’ Party, after 16 years of uninterrupted rule, lost the municipal election in October of 2004 to a competing left-of-center party. Opposition politicians cheered that Porto Alegre “does not belong to one party.” The reasons for the defeat were not straightforward. The opposition candidate ran a well-planned campaign that capitalized on anti-incumbent sentiments, calling on Porto Alegrenses to vote for “democratic alternation” (the tradition of parties alternating in power) and an end to “one-party rule.” There were also lingering negative sentiments from the one term of state- level Workers’ Party rule, not to mention the dissa tisfaction with President Lula’s national administration. The opposition ran a campaign of “keeping what is good, improving the rest” that proved particularly effective with middle-class voters who were ideologically opposed to the Workers’ Party but who recognized its effective style of governance. Campaign materials promised “change in a safe way, the way we want. He [mayoral candidate José Fogaça] knows that some changes are necessary, but without destroying the good things the city has achieved in the last few years, such as the participatory budget, and the World Social Forum.”

Unable to claim that a vote for the opposition was a vote against participatory budgeting, the Workers’ Party lost one of its trump cards in its bid for a fifth municipal term. In the first day of campaigning, the opposition candidate met with councilors of the participatory budget, visited their neighborhoods, and discussed ways to preserve and improve the process. While the vote was polarized, with poorer neighborhoods voting for the Workers’ Party, the vote among poor and working-class neighborhoods was not nearly as solid as in previous elections. While Marco voted for the Workers’ Party, he knew people who voted for the opposition, confident that the new mayor would devolve more funds to the participatory budget. He himself was skeptical but willing to participate and see before judging.

At the time of this writing, participatory budgeting in Porto Alegre is continuing much as before, with some former staff members even working for the new administration. The previous year’s rules, ratified by participants at the end of 2004, remain in force. The number of participants is lower in some districts, but the overall number of participants is comparable to previous years. What happens next to the participatory budget depends in large part on whether the new administration tries to alter the principle of participant-set rules or use its facilitators to manipulate the proceedings.

The Workers’ Party leaves behind thousands of participants in dozens of new neighborhood organizations who are connected to their communities and intimately familiar with the ins and outs of government and budgetary affairs. This organized civil society has an immense capacity for monitoring and influencing the government. It would be practically impossible to run a process of participatory budgeting that did not conform to high standards or that tried to manipulate participants.

Experience suggests that it would be difficult to entirely dismantle a successful participatory scheme even after the defeat of its sponsoring party. Parallel cases, as in Recife in the late 1980s, have ended in the eventual re-adoption of the scheme—if not the re-election of the party that promoted it—in response to the organized pressure of former participants. Had participatory budgeting been a different kind of institution, one without the democratic openness that makes it so vibrant, another party might never have been able to claim to be for the participatory budget and against the Workers’ Party.

In the end, whatever the future of participatory budgeting in Porto Alegre, its model of effective governance and vibrant civic life offers a striking contrast to newspaper headlines about corruption and civic disaffection. But if these two images seem at odds, it is only because of how we look at democracy. It is not simply that Brazilian democracy is in shambles and Porto Alegre is an island of civic-mindedness in a sea of apathy. Looking at citizen attitudes and behaviors in isolation from the state institutions and the politics behind them reveals little about democratic possibilities. The story of participatory budgeting is useful beyond the template it offers for other cities in Brazil and throughout the world. It also raises questions about the way we discuss declining civic engagement in the United States. Perhaps we should be asking not only about television-watching habits and other social behaviors but about the nature of our national and local governments. We should be asking how transparent, responsive, and accessible they are to the citizen.