Known throughout the world as the most soccer-crazy place on earth, Brazil is doing its best this month to live up to the reputation. With the quadrennial World Cup in progress in neighboring Argentina, matching Brazil's best players against those of 15 other countries, the attention of this nation of 115 million is focused - to the exclusion of virtually everything else - on the fortunes of its national team.

For all practical purposes, Brazil has shut down for the summer. On game days, the streets are deserted except for the ubiquitous flags and banners in the yellow and green national colors fluttering in the wind and small knots of people gathered around TV sets in "botequims," the cozy corner bars that are center of Brazilian street life.

It is a frustrating time for anyone hoping to do serious work. Offices and banks close at noon whenever Brazil has a game and even when other countries are playing, phone calls are answered by secretaries who explain, above the din of the television sets blaring in the background, that their bosses are "in conference" and will be until the following day.

The national congress finds itself unable to function for lack of a quorum. President Ernesto Geisel is reported to watch as many as three games a day with advisers in his office at the presidential palace in Brasilia.

The crime rate has dipped dramatically because everyone is at home watching the games - and the interminable replays and roundtable discussions that follow - on television. Many theaters and cinemas don't bother to open at night, and even the beaches are empty.

The cup bullup began immediately after the pre-Lenten carnival, that other great Brazilian obsession, ended in February. Night after night on television news broadcasts, major stories such as the kidnaping of Aldo Moro and Jimmy Carter's visit here have had to play second fiddle to detailed reports on the condition of team captain Rivelino's ankles and top goal-scorer Reinaldo's knees.

Now that the tournament is actually under way, passions have reached feverpit ch. After three-time champion Brazil was tied by Spain in an upset earlier this month, one unconsolable fan in Rio committed suicide. Another was prevented from jumping from a 90-foot-bridge only by the timely arrival of police.

ALONG WITH samba and surf, soccer is so much a part of the social and cultural fabric here that Brazilians profess to see its influence everywhere. To an outsider, many of the claims made about soccer's importance in Brazilian life seem entertaining but exaggerated - none more so than the imagined cause-and-effect relationship between the game and politics.

The year of the World Cup is always an election year in Brazil, and a popular dictum has it that when Brazil wins the cup, as it did in 1970, the government wins the election. When Brazil loses in the cup, as in 1974, the government loses the election.

"We've got incredible inflation, lousy wages, a drought, rigged elections and a military government that throws people in jail and tortures them when they get out of hand," says an office clerk in downtown Rio. "All that hurts.But if we lose the cup, then it's going to hurt even more."

But victory, too, can bring out popular resentment against the military governments. After Brazil beat Austria in a cup game earlier this month, police had to quell fans parading down the streets of Ipanema chanting "Up with the team, down with the dictatorship, up with the team, down with repression."

EVEN THE government seems to believe that the fact of the national team will affect its political fortunes. It has sought to assure cup victory this year by putting its own men in charge. The head of the National sports Federation is an admiral who also happens to be president of the ruling government party in the state of Rio. The team's coach is a former army captain, and his assistants are majors and lieutenants.

"We players have become campaign workers for the government," complained Reinaldo, the team's star player, who recently caused a sensation here by giving an interview to a socialist weekly in which he criticized Brazil's military rulers and their policies. "If we win the cup, they'll use our victory. I'm well aware of that."

For the most part, though, people connected with the team have learned to avoid talking publicly about politics. Brazilians still recall with rueful chuckles what happened to coach Joao Saldanha in 1970, when then-President Emillio Garrastazu Medici was pressuring Saldanha to put a favorite player of his into the team and a reporter asked if he was going to accept the "suggestion."

"Why should I?" the coach replied. "Medici didn't ask me for advice when he was putting his Cabinet together."

Soon afterwards, Saldanha was fired.

THE CUP also seems to have brought out a latent streak of nationlism in the normally easy-going Brazilians. The regime has concocted slogans to instill national pride - to have its efforts met with jokes and puns.

An example of this came a few months ago when the government dropped its old propaganda slogan and replaced it with a new one. After being told for ages that "This is a country that's moving ahead," Brazilians were suddenly being incessantly reminded that "Brazil is made by us."

In one of the jokes that circulated soon after the change, a child passing with his mother by a billboard emblazoned with the new slogan read the message and began to cry. When the mother asked what was wrong, the child stifled his tears and related: "Why do they always blame us when things go wrong?"

A PROMINENT Brazillian politician once complained that "logic ceases to function south of the Equator." With that thought in mind, reporters at one Rio daily have assembled in their newsroom a bulletin board on covered with statements by public figures that they see as examples of "pretzel logic." Some samples:

From Admiral Floriano Peixoto Faria Lima, governor of the state of Rio de Janeiro, in answer to a group of mothers complaining that their children were unable to attend school because of the lack of classrooms and facilities. "The problem, ladies, is not that there are not enough schools. The problem is that you, parents, have too many children."

From Gen. Joao Baptista Figueiredo, recently picked by Geisel to succeed him as Brazil's next president, in answer to a journalists who asked why Brazilian presidents are not chosen by popular vote: "In the barracks the other day I met a soldier who never brushes his teeth. In many places in the northeast, people have no notion of hygiene. And you ask me if the people are ready to elect a president?"

The place of honor on the board is reserved for a government proclamation that exempts those who have been officially declared "poor" from paying a particular tax. This exemption, the document continues, can be obtained at government offices - for a fee that amounts to only a dollar less than the total of the tax.