David Barkin on Mexico
Source Michael Perelman
Date 02/09/12/14:27

Towards a new understanding*

David Barkin
Universidad Autónoma Metropolitana
Xochimilco, Mexico City

Mexico is the wunderkind of Latin America. After suffering the "lost
decade" of the 1980s, alongside most of the other countries of the
region, apparently, the country has been successfully "retooled" to meet
the challenges of globalization. Not only did it reorganize its
productive structure so as to take advantage of its accession to the
GATT (now World Trade Organization, or WTO)  and implement a thorough
unraveling of trade barriers that led to an important increase in
international trade, but it also has made the transition required by its
integration into the North American Free Trade Agreement.

In the midst of a litany of social and economic disasters in other parts
of the hemisphere -from the profound crisis of Argentine society, the
challenges facing Venezuela, the continuing toll of violence in
Colombia, to the seemingly intractable problems of setting the Central
American republics on a path towards economic development- why should I
choose to focus on the problems facing Mexico in this period and in the
coming years?  Rather than attributing this nay saying to the whims of a
"spoilsport,"  I would ask you to consider my analysis as a basis for
reflection about the profound contradictions wreaking havoc on the
country and about the dangers of continuing with the present strategy of
unbridled international integration. Finally, I will end on a positive
note, considering some possible alternatives that groups in Mexico are
already attempting to implement.

A brief economic history:

Without going into details of methodology or the niceties of its social
significance,  I find that a brief exploration of the purchasing power
of minimum wages in Mexico a convenient metaphor for following the
country's economic history during much of the XX century.

Suffice it to say, for present purposes that after a lengthy period of
unprecedented prosperity from 1935 to 1970, popularly known as the
Mexican miracle, a seemingly endless series of crises ushered in a
period of declining real wages that brought the minimum wage index its
lowest point, since it was instituted in 1934.  Although its social
significance is different today, than it was at its zenith in 1976,
there is no question that real wages have been declining for a
substantial part of the population for more than a quarter century, and
that more than one-half of the population finds itself living in

The deterioration in personal incomes was accompanied by a dramatic
shift in the geographic distribution activity.  With a new emphasis on
the maquiladora as the source of  dynamism for the integration of the
economy into the global marketplace beginning in the mid-1980s, the
northern border region acquired a new significance that it is still
unprepared to manage. More than 3,000 firms were established, employing
in excess of 1.3 million people at its highest point, in the semi-arid
reaches of the Mexico's "semi-arid" north; concentrated in four enormous
cities (Tijuana, Cd. Juarez, Nuevo Laredo, and Matamoros) and more than
a dozen smaller border cities, local governments do not have the fiscal
resources or administrative and human capacity to manage this unbridled
growth.  Internal migration became a powerful force, polarizing the
country by reorienting population growth northward.

A second source of economic growth, the automotive sector, has also been
thoroughly transformed with integration.  It went from being a highly
protected industry producing high cost products for the local market, to
an important part of a global industry assembling vehicles with parts
produced in all three NAFTA countries, and boasting at least one of the
most highly productive plants on a global scale. This industry was also
relocated from its historical orientation to the concentrated local
markets in the central part of the country to new installations in the
deserts of northern Mexico to facilitate the importation of auto parts
and the export of finished vehicles; this further heightened pressures
on scarce water resources and desert ecosystems, and encouraged even
more migration from the declining states in central and southern Mexico.

Ironically, in spite of the dynamic growth of these two sectors, the
Mexican foreign trade balance has been in deficit since the early
1990s.(Figure 2)  Although somewhat reduced in the most recent period
because of the sharp decline in real incomes, the "deconstruction" of
the industrial sector and national policies facilitating imports has led
to a very important increase in foreign trade, and most especially the
import of inputs for the production of consumer goods. Unfortunately,
this led to the massive import of basic agricultural products, thereby
placing the peasantry at risk, along with tens of thousands of small
enterprises, unable to survive foreign competition.

The Bottom Line:

Mexico's people have gone from riches to rags. During the decades
following the Revolution, Mexico enjoyed years industrial growth, the
consolidation of an industrial labor force, and the modernization of
agriculture, along with important improvements in living standards, and
the availability of educational opportunities and medical services.
While it is true that inequality in Mexico increased substantially and
political control grew progressively more oppressive, by the mid-1960s
there was a sense of optimism that pervaded the country, incorporating
virtually every segment of society.

The dramatic reverses of the late-1960s  and political unrest generated
by the inability of the system to continue delivering on the promises of
the "revolution of rising expectations" ushered in a lengthy period of
multiple crises and political struggle.  During the first half of the
1970s, significant segments of the capitalist class engaged in class
warfare against the central government's attempt to protect wages,
initiating an unprecedented halt of investment activity that thrust the
country a process of social and economic conflict. It would take more
than a decade for the dust to settle, after which a new group of
financiers were in control and were reshaping the economy to prepare it
for its full integration into the global marketplace.

The decline in real wages and living standards  was accompanied by the
burgeoning of the informal economy and the emergence of a process of
social disintegration and a flourishing drug economy.  A deceptive
period of social calm followed, a result of a new period of price
stability achieved by the imposition of a draconian incomes policy; a
creative package of "bribes" bought widespread popular support for
policies to promote international integration.  Mexico's pretension to
become part of the "first world" was symbolized by its incorporation
into the Organization of Economic Cooperation and Development, and the
opening of negotiations for its accession to the North American Free
Trade Agreement. The imbalances created by an overvalued exchange rate,
financial improprieties and the dismantling of the domestic productive
structure provoked the devastating devaluation of December 1995 that
caused widespread suffering extending into the middle class and merchant
sectors.  The new model is dependent on foreign investment (in new
plants, in securities and in Mexico's foreign and internal debt) offers
attractive opportunities to young professionals in the financial,
communications and information technology sectors.

Alternative models for social and economic organization

Not all Mexicans are passively waiting to be pulled down into this
morass of declining real wages and increasing immiserization. In spite
of its seeming irrationality,  millions of peasant families continue to
plant native maizes for their own use and that of their neighbors. As
many as 15 million people are claiming membership in ethic communities,
although many of them no longer speak an indigenous language or
otherwise qualify for such status by census standards (which reports
about 6 million indigenous people).

In the aftermath of the Zapatista uprising in 1994, hundreds -if not
thousands- of indigenous communities have affiliated with the Congreso
Nacional Indígena and embarked on local and regional programs to
insulate themselves better from the problems of the national economy.
These communities are searching for ways to exercise a modicum of
self-governance in their internal organizations and in the management of
their territories.

Without going into more detail than would be appropriate in this short
presentation, suffice it to say that indigenous and peasant communities
are searching for ways to strengthen their organizations and their
ability to survive at the margins of globalized society. In addition to
maintaining relations with migrants and continuing to produce their
basic needs locally, they are looking for ways to diversify their
economies.  Among the areas that are becoming important are ecotourism,
artisan production and water management. I have been working with
several of these projects and can succinctly summarize their strengths:
they involve initiatives that attempt to identify ways of inserting
innovations into existing community structures to produce new
commodities and services.  They are most successful when the goods can
be placed in niche markets that protect the producers from the withering
forces of international competition or costly systems of
intermediation.  In other instances the projects offer communities the
opportunity to produce marketable services (e.g., culture- or
eco-tourism) or establish ecosystem management programs that generate
income from joint implementation programs under the Kyoto Convention for
Combating Climate Change or regional efforts to protect or enhance
watersheds and forests.

The most successful of these programs to construct alternatives to
globalization have a common commitment to not simply relying on new
products or services.  They explicitly include programs to reinforce
local capacities for social, productive and environmental management
along with some measure of investment to maintain or expand the local or
regional possibility of supplying the basic commodities required for
survival and community welfare. Thus, the process of diversifying the
productive structure is predicated on strengthening existing
institutions and defending inherited productive and ecosystem management
practices. These are the fundamental elements for moving towards the
sustainable management of regional resources.

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