The Political Economy of Corporate Insolvency: Peripheral Accumulation, Legal Violations, and Labor Conflict in Brazil

Various classical traditions in labor studies frame labor conflicts as disputes over productive surplus and/or resistance to the harmful effects of individual contract negotiations. These definitions generally overlook conflicts aimed at enforcing basic contractual clauses—such as disputes over timely wage payments. In this research, I seek to understand to what extent corporate insolvency dynamics in Brazil, which primarily affect economically peripheral companies (such as outsourcing firms), influence the frequency of this type of conflict. I discuss the main trends in corporate insolvency in the country and highlight, through multiple linear regression models, that this is one of the most important macroeconomic variables for the prediction of labor conflicts related to labor rights violations in Brazil (infraction-related strikes and labor lawsuits) – even though this influence is also shaped by socio-political and institutional transformations. Additionally, based on a literature review and case studies with workers affected by insolvency in outsourced companies, I describe how these companies seek to prevent and repress these forms of contestation, often also benefiting core companies.