IN LIFE, either you deal or get dealt," they tell the ten-year-old who has recently escaped from a juvenile prison and is trying to make it on the streets of Sao Paulo. And so, Pixote deals. He assaults and robs middle-aged women, stabs a prostitute, and accidentally murders his best friend.

Yet despite his misdeeds, Pixote remains an ambiguous character. With his older friends he is loyal, even loving. His eyes widen in horror when he murders, and he clearly suffers with his victims. He hardly possesses the strength to pull a trigger, but he kills senselessly. Not even an adolescent, he displays the weariness of a 60-year-old. Not since The Tin Drum has there been so unchildlike a child in film.

Ostensibly an aberration, particularly to American eyes, Pixote--"peewee" in Portugese--is a common figure in modern Latin American cities. The homeless children have little choice but to beg and steal. Neither their families, nor society as a whole is willing to care for them. Abandoned to the streets, Pixote is pressed into service by adult thieves because under Brazilian law he's too young to be indicted. Instead, he is repeatedly sent to a boys reformatory, where he learns of violent rape, murder and spiritual corruption. Inside, Pixote is victim; upon his release he turns predator. But his character does not seem to have changed.

Director Hector Babenco succeeds in maintaining a posture of moral ambivalence throughout Pixote. If Babenco sheds no tears for Pixote's lost innocence, neither does he condemn the little criminal for his brutal atrocities. Though occasionally frustrating, this objectivity gives the film enormous credibility. Babenco reveals the truth; in this story, the truth is enough.

Pixote is one of the most powerful films ever made about poverty and oppression in Latin America. Its lack of overt moral commentary is more than compensated for by its stark, at times shocking, realism. Even the most graphic American films seem tame by comparison. Babenco uses scenes of crude abortion and vicious sodomy to capture the misery of an impoverished and overpopulated Third World metropolis. Filth, noise, chaos, this is Pixote's world: grim walls, dim light, inane pop music blaring in the background.

The decay is symbolic as well as physical. When a prominent businessman is killed, the authorities send Pixote and other boys to participate in a police line-up, even though all had been locked up at the time of the crime. A new cycle of official brutality begins, and when the mother of one boy complains to the press about the situation, the child is killed by his guards. One of the film's most moving scenes portrays a crowded dining hall of youngsters watching one of their number falsely accused of the businessman's murder. The boy pulls out a knife and threatens an unarmed prison administrator, ensuring his own death. Disgusted by what they see, the other inmates mount a successful riot, which prompts the visit of a sympathetic judge, the only honest politician in the film. He asks the boys to tell him the whole story as if they were "telling it to a father." But it is too late for rehabilitation; the youthful criminals refuse to speak.

Babenco's criticism of the Brazilian regime is potent. Those in positions of authority in Pixote from warden to minister, are interested only in covering up their own sins, never in serving the government. Although Pixote is adapted from a book, under Babenco's direction the film seems so realistic that it appears to have no props and no actors.

The director wisely chose to cast non-professionals, boys whose backgrounds are similar to those of the characters they portray. When he shoots a large event, such as a riot in the prison, he does so with the detachment of a news reporter, following the action as it happens without dramatic flair.

The emergence of a Brazilian film industry with international acclaim is a welcome development. For too long, the Latin American film world has been dominated by American directors, and Latin American culture too heavily influenced by the values implicit in American films. Though it will take a long time to erase misunderstandings of the Third World, the emergence of films which show a reality alien to our own is a large step toward progress.