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ELFUTURODELAALIMENTACIÓNYRETOSDELA AGRICULTURAPARAELSIGLOXXI: Debatessobrequién,cómoyconquéimplicacionessociales,económicasy ecológicasalimentaráelmundo. THEFUTUREOFFOODANDCHALLENGESFOR AGRICULTUREINTHE21stCENTURY: Debatesaboutwho,howandwithwhatsocial,economicandecological implicationswewillfeedtheworld. ELIKADURARENETORKIZUNAETANEKAZARITZAREN ERRONKAKXXI.MENDERAKO: Munduanork,nolaetazer-nolakoinplikaziosozial,ekonomikoetaekologikorekin elikatukoduenizangodaeztabaidagaia Afarewelltourban/ruralbias:peripheral financecapitalisminMexico NadineReis Paper#6 Apirila–Abril–April 24,25,26 2017 www.elikadura21.eus Afarewelltourban/ruralbias:peripheralfinance capitalisminMexico NadineReis BasedonadiscussionofthestructuraltransformationoftheMexicaneconomy, thispaperinvestigatestheimpactoffinancializationonagriculture’srolein capitalistdevelopment.Itarguesthatunderfinance-ledaccumulation,the national-levelrural/urbanandagriculture/industrydistinctionshaveceasedtobe adequateconceptsforexplainingthehistoricalpathofcapitalistdevelopmentin theperiphery.Financecapitalisindifferenttothesedistinctionsonanational scale,becauseaccumulationworksthroughwealthextractionfromlabouratlarge bytransnationalfinancecapital.Ratherthanurban/ruralbias,themainproblem infinancializedcountriesoftheperipherytodayis‘financebias’.Amajor contradictionofthecurrentaccumulationsystemdoesnotonlystemfromthe increasedrelevanceof‘functionaldualism’,butalsofromthefinancingofcheap food/cheaplabourthroughrisingdebt. Keywords:financialization;urban-rurallinks;Mexico 1. Introduction Thequestionofagriculture’sroleintheeconomicdevelopmentofacountry,and thequestionoflinksbetweenruralandurbandevelopment,areamongtheoldest andmostcontroversiallydebatedissuesofdevelopmenttheory.Atthecoreofthe debateinagrarianstudieswaswhatBernsteincalledthe‘agrarianquestionof capital’,focusingon“thetransitiontocapitalisminwhichtwodefinitive (“stylized”)classesofpre-capitalistagrariansocialformations(“feudalism”)– namelypredatorylandedpropertyandthepeasantry–aretransformed (displaced,“eliminated”),bytheemergenceofcapitalistsocialrelationsof production,inturnthebasisofanunprecedenteddevelopmentoftheproductive forcesinfarming”(Bernstein2006,450).Foralongtimethroughoutthe20th century,thisquestionwascentralsinceitwasassumedoratleasthopedthatif onlyitwassolved,thiswouldinaquasi-automaticmannerleadnationalsocieties intoasituationwhereeconomicdevelopmentwouldsortitselfoutthroughthe developmentoftheproductiveforces.Hence,thedefeatofthepredatorylanded classthroughlandreformsandtheestablishmentofbourgeoispropertyrightsin landwereonthetopoftheagendaofbothMarxistandbourgeois‘modernizers’ (DeJanvry1981,12).TheMexicanagrarianreforminthe1930sisafamous instanceof‘bourgeoisrevolution’(Knight1989,26;Gómez-Oliver2012,222f.), andtheSovietcollectivizationofagriculturewasthemosttragicallyfailed political-strategicattempttosolvetheagrarianquestionofcapitalbyforce (Bernstein2006).AsBernsteinfurtherpointsout,theclassicagrarianquestionof capitalhaspracticallybecomeobsoletesincetheendofthe1970s,when predatorylandedpropertyhadbecomeinsignificantasadominantclassforce (Bernstein2006).Itcanbehypothesizedthatitwasinthiscontextthattheinter ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. Abstract 1 ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. sectoralaspectsofcapitalistindustrialization-thatis,therelationshipbetween theagriculturalsectorandindustrialization-shiftedmoretotheforefrontofthe debateaboutdevelopment,sinceevenwhereagriculturehadbecomelargely capitalist,‘development’didnotseemtoautomaticallysucceedfromthere. 2 Hence,thedebateabout‘rural-urbanlinks’pickedupmomentuminthe1970s and1980s,andinparticular,duetoLipton’s‘UrbanBias’thesis.1Inhiswidely citedandinfluentialbook,‘Whypoorpeoplestaypoor’(Lipton1977),heclaimed thateconomicstagnationandpovertyindevelopingcountriesexistedduetothe classconflictbetweenthe‘urbanclass’andthe‘ruralclass’,whereasthe‘urban class’wassopowerfultodivertthelargestshareofavailableresourcesina countrytourbanareas.Thisinturn,heargued,hinderedtheoveralldevelopment ofacountry,sincenotonlywasthewealthofthe‘urbanclass’createdatthe expenseoftheruralareas,buttheavailableresourceswerenotinvested efficientlysodevelopmentcouldoccur.Inthefollowingdecades,Lipton’sthesis waswidelyadoptedindevelopmenttheoryandpractice,eventhoughithasalso beenheavilycriticized. Itgotratherquietarounddevelopmenttheoryandtherural-urbanlinksdebate withtheendofthe‘grandtheories’andtheradicalcallingintoquestionofthe ideaof‘development’bypoststructuralistscholarsintheacademicworldinthe 1990s(Escobar1992).However,thisdoesnotmeanthatdevelopmenttheories andtheirelementsarenotpresentinpublicdiscourseandpolicyanymore.The UBthesiswasrepeatedlyrenewedbyLipton(Eastwood/Lipton2000;Lipton 2005),arguingthatUBwasstillpresentorevenworsenedafterneoliberalreforms indevelopingcountries,eventhoughstructuraladjustmentmeasureshad–sohe claims-improvedthetermsoftradeforagricultureagainstindustry.Most notably,theUBthesisgainedrenewedpopularity(evenifmostlynotexplicitly) withthe2008globalfoodcrisis(Kay2009,deJanvry2010;JonesandCorbridge 2010).Inthesameyear,theWorldBankpublisheditsWorldDevelopmentReport titled‘AgricultureforDevelopment’,signallingthekeyimportanceassignedtothe roleofagriculturefortheoveralldevelopmentofcountries.Thepoliciesof internationalorganizationssuchasFAOandtheWorldFoodProgramme,aswell asthepoliticalagendasofmanynon-governmentalorganizationsandsocial movementshavesincethenechoedthemainclaimoftheUBthesisthaturban classesdominatenationalpoliciesattheexpenseofagricultureandrural development.Jones/Corbridgegosofartostatethat“theideathatcities dominatethecountrysidehas,onoccasions,seemedtobetheonepointof commongroundbetweenpro-marketreformersattheWorldBankandsocial movementsarguingforsocialjusticeandredistribution”(Jones/Corbridge2010, 2).InitsrecentAgricultureActionPlan,theWorldBankrestatestheneedto address“cross-sectorallinkagesbetweenagriculturalactionsandoutcomesfor economicgrowth,livelihoods,theenvironment,nutrition,andpublic health”(WorldBank2013).Inshort,itisevidentthatagricultureisstillassigneda keyplaceintheeconomicandsocialdevelopmentofcountriesindominantpolicy practiceduetoassumptionsaboutitsfunctionsfordevelopment. Nevertheless,atheoreticallyandempiricallyinformedreflectionofrural-urban linkshaslargelybeenlackingfromthemorerecentacademicdebate.Exceptions 1 Liptonarguedthattheurban-ruraldistinctionwaspreferabletotheagriculture-industrydivision sinceitwasmoreencompassing(Lipton1977,60). areKay(2002,2009)andJones/Corbridge(2010),whobothresumethediscussion aroundUBsupportingearliercriticismsofboth‘agrarianist’and‘industrialist’ modernizersasbeingbasedonfalsedichotomies(cf.Corbridge1982).Basedon ananalysisoftheplayingoutofrural-urbanlinksintheactualdevelopment experiencesofSouthKoreaandTaiwan,Kay’smainconclusionisthat“themost successfuldevelopmentstrategyisoneinwhichtheStateisabletoexploit creativelythesynergiesbetweenbothsectorsbydevelopingtheir complementaritiesandenhancingtheirdynamiclinkages”(Kay2009,104; emphasisadded).Further,Kayconcludesthat“theformofdualisticthinkingas expressedintheUBthesisisanincreasinglyunhelpfulwayofthinkingabout development”,consideringtheincreasingfluiditybetweenurbanandruralsectors intermsofcapital,commoditiesandlabourinthecontextofneoliberal globalization(Kay2009,122;HartandSitas2004).Inasimilarlineofargument, referringtotheworkofEllisandHarriss(2004),Jones/Corbridgepointoutthat thedistinctionofurbanandruralsectorsisincreasinglyoutofdateconsidering thehigherlevelsofnationalandglobalintegrationofspaces(JonesandCorbridge 2010,11f.).Inparticular,bothKayandJones/Corbridgearguethatthisisevident withregardtotheincreasinglymultilocationallivelihoodstrategiesofruraland urbanhouseholdsthatincludethemixingoffarmandnon-farmactivitiesinurban andruralareas,anddifferentformsofnationalandinternationalmigrationthat combinetraditional‘rural’and‘urban’activities(Kay2009,122f;Jonesand Corbridge2010,11f;seealsoBernstein2009).Moreover,oneofLipton’sbasic assumptions,namelythatpovertyispredominantlyrural,isincreasingly questionablenotonlyinviewoftherisingnumberofurbanpoor,butalso regardingtheunstableandinconsistentdefinitionsofwhatcountsas‘urban’and ‘rural’inofficialstatistics(JonesandCorbridge2010,8-9). ThispaperdepartsfromtheseearliercriticismsoftheUBthesis,butaimstotake thedebateonestepfurther.Basedonaninvestigationofthestructural transformationoftheMexicaneconomysincethe1970s,Iarguethatthinking aboutdevelopmentintermsofrural-urbanoragriculture-industrylinkageshas furtherlostgroundinbeinganaptwayofconceptualisingtheeconomicreality thatacountrylikeMexicofacestoday.Thisrealitycanbecharacterizedas peripheralfinancecapitalism.Financializationhasrecentlygainedmuchattention infoodandagrarianstudies,butmostlywithaviewonthesectoritself(seefor instanceFairbairn2013,2014,2015andOuma2014onland;Russi2013and Isakson2014ontheagrofoodindustry;Murphyetal.2012oncommoditytraders; Breger-Busch2014onagriculturalderivativemarkets;Clapp2014onthe implicationsoffinancializationforglobalfoodpolitics).Whathaslargelybeen lackingsofarisaninvestigationoftheimpactoffinancializationonagriculture’s roleincapitalistdevelopment.Thepresentpaperaimstofillthisgapinthe literatureandexplorehowfinance-ledaccumulationshapesanddismantles urban-rurallinksandtheirimpactonbroaderdevelopment. MexicowasamongthefirstcountriesinLatinAmericatoimplementathorough neoliberalreformagendabeginninginthe1980s,almostcompletelyopeningits economyandprivatizingstateownedcompaniesandbanks.Sincethe implementationofNAFTAin1994,Mexicohasreceivedenormousquantitiesof foreigncapitalinflows.Today,Mexicohas44freetradeagreements,including withtheEU,ChinaandJapan.Inthissense,Mexicoisa‘bestcase’ofneoliberal developmentpolicy.Bothagricultureandindustryhavedevelopedatagreatpace ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. 3 ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. 4 andintensity,andthecountryistodayamongtheworldleadingexportnationsfor severalagriculturalaswellasmanufacturedproducts.Atthesametime,economic growthhasbeenslow,anditsbenefitshaveonlyreachedapartofthepopulation: 46%ofMexico’spopulation–55.3millionpeople–livedinpovertyin2014,2 millionmorethanin2012(CONEVAL2016).Thispaperarguesthatthediscussion aboutinter-sectoralaspectsofcapitalistindustrializationindevelopingcountries- oneofthemajordimensionsoftheagrarianquestion–musttakeintoaccount thefinancializationofglobalcapitalaccumulation,andtheparticularwayinwhich itshapesthepossibilitiesfordevelopment2intheperiphery.Financialization impliesthatthedominantlocusofcapitalaccumulationhasshiftedfromthe sphereofproductiontothesphereoffinancialmarkets(Harvey,1989,pp.191-94; Arrighi,1994;Krippner,2005,p.181;Lapavitsas,2013).Theliteratureon financializationindevelopingcountriesfromacriticalperspectiveisstillrather scarce,butthereisgrowingevidencethatitisamajordimensionofnewunequal developmentonaworldscale(Lapavitsas2009;Painceira2009;Beckeretal. 2010;Bonizzi2013;Powell2013). InthispaperIusetwostrandsofdataonMexico,andconfrontthesewiththe debateoncapitalistindustrializationassketchedabove.Thefirstistheavailable literatureandstatisticaldataonthedevelopmentofMexicanagricultureand industry,payingspecialattentiontoagriculture-industrylinksincapitaland labour.ThesecondistheliteratureonthefinancializationoftheMexican economy.Bydoingso,Ireconstructthedismantlingofthenationalmodelof economicdevelopment,whichaimedforeconomicgrowthbasedonthe productivesectorsoftheeconomy,andthetakingoverofthetransnational finance-ledaccumulationregime,whichisorientedonwealthextraction.Therole ofthestatehastherebyturnedfromthedevelopmentalstatetothecrisismanagingstate.Underconditionsoffinance-ledaccumulation,capitalist agriculturehasover-alldeveloped,inthesenseofincreasingmechanization, outputandexportvalues.However,insteadofservingbroad-baseddevelopment, finance-ledaccumulationfeedstheaccumulationofprofitbyatransnational financialelite.Thisdevelopmentmodelisinherentlyunsustainablenotonlydueto theexpatriationofprofit,butparticularlyduetoitsdebt-financednature. Thepaperisstructuredasfollows.Section2reviewsthedebateonrural-urban linksincapitalistdevelopment,andhowthenationaldevelopmentmodelin Mexicofollowedthisgrowthmodel.Section3tracksthedevelopmentof agricultureandindustryinMexico,investigatinghowtheinter-sectorallinks betweenagricultureandindustrydevelopedsincethefinancialopeninginthe 1990s.Itconcludesthatlinksarepracticallyabsentintermsofcapitalflowsmainly duetotheincreasingdominanceoftransnationalcorporations(TNCs)inboth sectors,whilethesectorsarelinkedthroughagriculture’sprovisionofcheap labourforindustry.Section4reconstructsthefinancializationoftheMexican economystartinginthe1970s,andcomingtofullpowersincethe1990s.Itshows thatmonetarypolicyhasbeenadaptedtotheneedsoftransnationalfinance capital,andhowthisaffectsthedevelopmentoftherealeconomy.Section5 concludesonperipheralfinancializationanditsimplicationsforthedebateon agriculture’sroleincapitalistindustrialization.Ithypothesizesontherenewed 2 Theterm‘development’isusedhereinthesenseofavisionof‘goodchange’inbothpossible meanings,i.e.bothas‘developmentalongsidecapitalism’and‘developmentagainstcapitalism’ (Thomas,2000,29). relevanceoftheoriesofdependencyandglobalunequaldevelopment,which, however,needtoberefinedandadaptedaccordingtothenewandstillunderresearchedconfigurationsoftransnationalizedclassrelations. 2. Rural-urbanlinksintheclassicdebate Acrossideologicalstandpoints,thereisarangeoffactorsthathavelargely uncontroversiallybeenseenasfunctionalcontributionsofagriculturefor economicdevelopmentofcountries.Theidentificationofthesefunctionswas basedontheEuropeanexperience,andtheycanroughlybegroupedintotwo sets.First,therearefunctionalcontributionsthatrelatetotheformationof capitalandadomesticmarket.BothneoclassicalandMarxistdevelopment theoristsagreedthatgrowthintheagriculturalsectorisanecessaryprecondition ofgeneraleconomicdevelopmentinthatitservesasan‘engine’for industrializationthroughtheprovisionofcapitalsurplusesfortheinvestments neededintheindustrialsector,particularlyintheearlystagesofindustrialization, andincountriesthatdonothavelargerevenuesfrompetroleumormineral exports(JohnstonandMellor1961,576f.;Byres1982;Kay2009,116). Onceindustrializationhassucceededtoacertainlevelandisabletogenerate sufficientsurpluswithinthesector,theneedforcapitaltransfersfromagriculture becomeslessandindustrialresourcescanthenbeusedtofinancethegrowthof agriculture(Kay2009,116).ReferringtothecasesofTaiwanandSouthKorea,Kay highlightsthecentralroleofthesynergiescreatedthroughcapitalflowsbetween agricultureandindustryfortheirdevelopmentsuccess(Kay2002;Kay2009,118). Notonlywasthecreationofsufficientsurplusinagricultureseenasfundamental forreinvestmentsintothedomesticindustry.Agriculturalsurpluseswerealso seenasnecessaryforearningforeignexchangethroughtheproductionforexport, whichwouldbeneededforfinancingtheimportofmachineryandotherindustrial inputsthatcannotbeproduceddomestically(JohnstonandMellor1961,574; JohnstonandKilby1982,53;Calva1999,36).Further,sufficientgrowthofthe agriculturalsectorwasexpectedtohavepositiveeffectsontheoverallnational economythroughthecreationofahomemarket,inthathighercashincomein ruralareasincreasesruraldemandforindustrialproducts(Byres1982,82). ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. Functions/contributionsofagriculturefordevelopment “Abroadlybasedexpansionoffarmcashincomegeneratingdemand for low-costandrelativelysimpleinputsandconsumergoodscanbe expected to foster efficient, evolutionary growth of domestic manufacturing that is characterized by relatively low import content andwhichleadstothestrengtheninganddiffusionofentrepreneurial andtechnicalcompetence”(JohnstonandKilby1982,53) Otherscholars,oftencategorizedas‘neopopulists’,assignedanimportantroleto agrarianreform,sinceitwouldleadtoamoreequitableincomedistribution, whichwouldinturnstimulatethehomemarket–afactorthatisalsoseenas havingsignificantlycontributedtosuccessfulindustrializationinTaiwan(Kay2002, 1076f.;Kay2009,120). Second,developmenttheoryassumedthatintheprocessofexpandingnon-farm sectorsoftheeconomyandlabourforce,growthinagricultureiskeyfor developmentinthatitprovidesincreasedsuppliesoffoodandagriculturalraw 5 ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. materialsforthedomesticmarket,thatis,avoidingtheneedofhavingtospend foreigncurrencyforfoodimportsandhencecompromisingonthebalanceof trade.Inparticular,thiswasseenasimportantforcountriesthatdonothave foreignexchangeincomesthroughlargerevenuesfromexportingmineral products(JohnstonandMellor1961,574,590;JohnstonandKilby1982,53).In thedevelopmentexperienceofTaiwanandSouthKorea,thesupplyofcheapfood totheindustriallabourforcebydomesticagriculturewasanimportantfactorwhy labourremainedcheapinthebeginningphaseofindustrialization(Kay2002, 1095;Kay2009,119). 6 Thethirdsetoffunctionalcontributionsofagricultureforoveralldevelopment relatestoitsroleinthestructuraltransformationofthelabourforce.Early developmenteconomistsassumedthatdevelopmentwouldgainforcethrough thetransferoflabourfromtheruraltotheurbansectorsinceunproductive, cheaprurallabourwouldachieveahigherlabourproductivityinindustryandthus contributetocapitalaccumulationandgrowth(Mandelbaum1945;Lewis1954). Indeed,viewingagaintheexperienceofSouthKoreaandTaiwan,thecheap labourforcereleasedfromagriculturewaskeyforindustrialization,allowing capitaliststocompeteonworldmarketsandgainhighprofitsthatcouldbe reinvestedintheirproductivecapacity(Kay2002,1095;Kay2009,119). The‘UrbanBias’thesisanditscritics Due to the rural-urban linkages that were established by early development theorists, which basically assumed that agriculture’s role was to contribute to industrializationthroughthetransferofvariousresources,“itwasgenerallytaken for granted that development strategy should give primacy to industrialisation” (Kay2009,105;cf.Lipton1977,63ff.).Withhis‘UrbanBias’thesis,Liptonradically challenged this idea. Lipton argued that the main cause for underdevelopment wasthatpoliciesindevelopmentcountrieswerebiasedtofavourthe‘urbanclass’ againsttheinterestsofthe‘ruralclass’,inturnhinderingtheoveralldevelopment of the country (Lipton 1977). ‘Urban class’ thereby not only includes the urban population, but also the group of richer farmers, who were allies of urban consumersintheirsupportofcheapfoodsupply(Lipton1977,67;1982,68). “Thecitieswanttoreceivepreferablycheapsurplusesformtherural areas: surpluses of food, surpluses of savings over rural investment; surplusesofexportablesoverimports,toprovideforeignexchangefor industrial development; surpluses of ‘human capital’, in the shape of rural-borndoctors,teachers,engineersandadministrators,aschildren broughtuplargelyatruralexpense,butasadultsservinglargelyurban needs. Who, in the rural areas, can provide such surpluses? Clearly, thebetter-off,especiallythebigfarmers”(Lipton1982,68). Lipton’s most important insight was that ‘urban biased’ policies caused ‘price twists’,i.e.termsoftradeworkinginfavourofurbanconsumersandagainstrural producers.‘Pricetwists’madeagriculturalproductsrelativelycheapercompared to the prices of urban products, which caused structural disadvantages for rural areas (Lipton 1977, 287ff.). A key instrument in urban-biased policies was the overvaluation of national currencies, which favoured food imports and distorted domesticagriculturalprices.Becausethemajorityofthepoorlivedinruralareas, ‘UrbanBias’ultimatelymeantthatresourcesaretransferredfromthepoortothe less poor. According to Lipton, supporting small farmers would benefit overall developmentnotonlythroughfavouringamoreequitabledevelopmentpath,but in particular, because small farmers were better at providing the functions of ‘agriculturefordevelopment’byusingcapitalmoreefficiently(‘inverserelation’). Lipton’sanalysiswasmostforcefullychallengedbyByres,whoarguedthatthe lackofeconomicdevelopmentwasnotdueto‘UrbanBias’,buttothelacking resolutionofthe‘agrarianquestion’:thefulldevelopmentofcapitalistrelationsof productioninagriculture,andfinally,theachievementof“undisputed hegemony”oftheurbanbourgeoisieagainsttheinterestsofcapitalistfarmers (Byres1982,82f.). “Until then the full unleashing of productive forces in industry could be frustrated where, through their political power, rural capitalists couldmaintaintermsoftradewhichwerepersistentlyunfavourableto industry:amajorfactorpreventingindustrialgrowth,whichwaslikely tobecompounded,wherethelandedinterestdominatedthepolicy” (Byres1982,83) Becauseofthepoweroflandlords,whichpreventeda‘squeezing’ofagriculture fortheprovisionofsurplusnecessaryforindustrialization,theproblemwasrather ‘ruralbias’than‘urbanbias’(Byres1974,1979).ThedebatebetweenLiptonand Byresalsoillustratesageneralcontroversybetween‘modernists’thatbelievedin thedevelopmentofcapitalist,large-scalefarmingastheonlyroadtowardsoverall development3,andthe‘populists’whoadvocatedtheadoptionofcapitalintensivesmall-scalefarming,takingfulladvantageoftheefficiencyofpeasant familyfarmingforthetransformationoftheeconomy–acontroversythatliveson today,evenifinmodifiedways. Inmorerecentwritings,Liptonholdsthaturbanbiasisstillpervasivein developingcountries,evenafteranti-ruralpricedistortionswerereducedthrough structuraladjustmentmeasures(EastwoodandLipton2000;Lipton2005,725). Whileanti-ruralpricedistortionshavebeenreduced,otheranti-ruraldistortions haveincreased,e.g.regardingallocationsforhealthandeducation,andoverall rural-urbandisparitieshaveoftenworsenedthroughthegreaterpowerofthe urbanclassoverresourceallocation(EastwoodandLipton2000;Lipton2005, 725). ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. “Theunder-useofthehumanresourcesofsmallfarmersandlandless labourerspreventstheruralsectorfromgeneratingalasting,soundly based,efficiently(becauselabour-intensively)produced,farmsurplus forexchangeonfairtermswithurbanproducts,andpermitsonlyabig farmsurplus,costlybecauseintensiveinitsuseofcapitalandenergy, but (due to inadequate, urban-biased incentives) too small and too unreliabletoserveasfirmbaseforurbangrowth”(Lipton1982,74). Mexico’snationaldevelopmentmodel,1934–1982 Mexico’sdevelopmentpathuptothe1970sfollowedthelinesofanational developmentprojecttunedtothecreationoflinksbetweenagricultureand industryforachievinggrowththroughmacroeconomicpolicies.Afterthe1930s TheSovietexperimentofthecollectivizationofagricultureasprojectedroadtowards industrializationanddevelopmentcanbeseenastheSocialistvariantofthis‘modernist’ developmentstrategy(cf.Bernstein2006). 3 7 ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. ‘bourgeois’agrarianreform,Mexico’scommunalejido-sectorownedmorethan halfofproductiveagrarianlandinMexicoandwasthemajorfactorinthehigh growthratesofthesectorbetween1934and1950.Inthisperiod,public investmentintotheagrariansectorgrewatanannualrateof17%inrealterms (Gómez-Oliver2012,224).Duringthe‘agriculturalmiracle’between1946and 1965,theagriculturalGDPgrewatanannualrateof6.1%,contributingtobroader economicdevelopment:agriculturesuppliedfoodandrawmaterialstotherapidly growingindustrialandurbansector;itproducedsurplusforexportwhichwas usedforcompensatingtheindustrialtradedeficit;andithelpedtheexpansionof theinternalmarketfordomesticindustrialproducts(Calva1999:37f.). Theperiodbetween1940and1982wascharacterizedbythetypicalfeaturesof agriculturalpolicyaccordingtotheImport-SubstitutingIndustrialization(ISI) model,asitprevailedthroughoutLatinAmerica,AfricaandAsia.Macro-economic policyconsistedinthesupportofdomesticconsumptionandcreatingfavourable conditionsfordomesticindustrythroughanovervaluedexchangerateandtrade protection(GereffiandEvans1981).Thenegativeeffectsonagriculturalprices werecompensated–initiallysuccessfully-byheavypublicsupportofthe agriculturalsectorintheformofirrigationinfrastructure,subsidiesforinputand credit,extensionservices,andaboveall,asystemofguaranteedprices(Calva 1999,39f.;Gómez-Oliver2012,226f.).Thefirst,‘horizontal’phaseofISIsawthe successfuldevelopmentoflocalmanufacturingoflightconsumergoods, stimulatedbytheeffectsofWorldWarIIandtheKoreanWaroncentre economies.Thisphasewascharacterizedbyarisingnationalbourgeoisieand diminisheddependencyonforeigncapitalascomparedtothephaseofprimary productexportsbeforetheGreatDepression(GereffiandEvans1981,38f.). However,thischangedaftertheeconomiccrisisof1954,whentheMexicanstate embarkedona‘vertical’ISIstrategy,focusedonbroadeningtherangeofdomestic productiontoincludedurablegoods,especiallycars.Thisrequiredmore technologicallyadvancedandcapital-intensiveinvestments,whichcouldbemet byforeigncapital.Localmanufacturingbecameincreasinglyforeign-owned,and theverticalISIstagelaidthebasisforthe“’triplealliance’ofstate,TNC,andlocal capital”,marking“thefullblossomingoftheprocessof‘dependentdevelopment’ (ibid.,39f.).Althoughlocaldomesticmanufacturingroseandimportsfell,alarge shareofthesurpluswasabsorbedbytransnationalcapital.Atthebeginningofthe 1970s,52%ofassetsofthelargest300manufacturingfirmswereforeignowned (ibid.,41). Inagriculture,thestructureofrelativeagriculturalprices4madeagricultural exportslessprofitable,markingthebeginningofincreasingimports(Gómez-Oliver 2012,226).Moreover,thesystemofsubsidiesintensifiedtheexistingpolarization oftheagriculturalsector,sinceitmainlybenefittedlargefarmers(FoxandHaight 2010,11).Inthisperiod,smallfarmersbegantodiversifytheirincomesources andincreasinglyreliedonadditionalwagelabourfortheirlivelihoods(GómezOliver2012,228f.;Eakinetal.2014). 8 Hence,evenifofficialpolicyfollowedthenationaldevelopmentmodel, stimulatinglinksbetweenagricultureandindustrywerealreadyweakeninginthe laterISI-phaseduetotheincreasingrepatriationofsurplusesabroad.The dominanceoftheurbanovertheruralsectorhadtobeattributedtoeconomic 4 Pricescomparedtointernationalagriculturalpricesandpricesofotherdomesticsectors dependencyratherthanto‘urbanbias’(Redclift1984).Iwillargueinthe remainingpartofthispaperthatexternaldependencyhasintensifiedwiththe financializationoftheeconomy,andfurtherdismantledfunctionallinkages betweenagricultureandindustry.Todevelopthisargument,thenextsection examinesthedevelopmentoftheagriculturalandindustrialsectorsinMexico sincethebeginningoftheneoliberalreforms,puttingspecialattentiontointersectorallinks. Theclassicagrarianquestionreferredtothedevelopmentofsocialrelationsof productioninagriculture,andhowagriculturecanormustcontributetothe accumulationofcapitalnecessaryforindustrialization.Inthefollowing,Iwill analysethedevelopmentofagricultureandindustryinMexicosincethe1990s, andshowthatthedualeconomicstructurehasconsolidated:Ontheonehand, thereisagrowing,fullygloballyintegratedexportsectorinbothagricultureand industry,whichthrivesonthebasisoflargestatesubsidies,whilethesurplusis increasinglyappropriatedbytransnationalcapital.Ontheotherhand,thereisa domesticeconomicsectorthatlacksaccesstocredit,isunderdeveloped, stagnatingand(inthecaseofagriculture)subsistence-oriented.Whilelinks betweenagricultureandindustryarealmostnon-existentintermsofcapital flows,thedestructionofsmall-scalefarmingthroughanagriculturalpolicy favouringindustrialfarmingprovidesanecessarycomponentforthelatter:an abundantsourceofcheaplabour. 3.1Agriculture-industrylinksthroughcapital Agriculture Sincethe1990stherehasbeenanintensificationandconsolidationofthe divergingdevelopmentofagriculture’stwosubsectors,whichgoesbacktoa changeinagriculturalpolicy.Incontrasttoofficialneoliberaldiscoursepromoting marketliberalizationandstatewithdrawal,theperiodsincethe1990shasbeen characterizedbyincreasingagriculturalsubsidies.However,thesehavebeen heavilyconcentratedtowardsasmallgroupoflarge-scaleproducersand transnationalagribusiness(FoxandHaight2010;Appendini2014).Between1994 and2010,atleastUS$20billionwerespentindirectpaymentstofarmers(Fox andHaight2010,13).Between2000and2009,publicspendingonagriculture doubled(WorldBank2009,6).Totalruralexpenditureamountedtoaquarterof publicspendingin2009andissimilartoexpendituresforurbansectors,which leadstheWorldBanktoacknowledgethatthereisno‘urbanbias’inMexico (WorldBank2009,29).However,between50and80%ofallagriculturalspending wenttotherichest10%ofproducers(WorldBank2009,52ff;Scott2010).The municipalitieswiththegreatestpovertyandthegreatestsharesofindigenous populationreceivedaminimalpartofagriculturalspending,eventhoughtheyare theonesmostdependentonagriculturefortheirlivelihoods(Fox2013,58). “Ironically, while the popular claim is that the government has abandonedmaizeproducersandthe‘campo’,therealityisthatfiscal expenditure has increased for maize over the past decade, but has beentargetedatasmallandselectgroupofparticipants”(Appendini 2014,22). ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. 3. Agriculture-industrylinksviewedthroughcapitalandlabour 9 ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. Whiletheprovisionofmaize,Mexico’sbasicfoodcrop,hasbeentakenoverbya smallgroupofproducersintheNorthernstateofSinaloa,globalcorporate businesshastakenovertheotherpartsofthemaize-tortillachain(Appendini 2014,3;Eakinetal.2014,144).5Haight(2010,34)concludesthat“[i]nsteadofthe governmentrunningthegrainmarketatartificiallyhighprices,thegovernmentis nowpayingprivate(transnational)corporationstodoso–andpayingasmanyas threedifferentsubsidiesforthesamegrain”.Akeycomponentinsupporting large-scaleproductionhasbeentheexpansionofirrigatedlandthroughfurther publicinvestmentintonewirrigationschemesandinparticular,throughthe heavysubsidisationofelectricityforpumping(WorldBank2009,47;Scott2010, 86).ThishasespeciallybenefittedthelargecommercialproducersintheNorthern states(FoxandHaight2010,12f.). Duetomassivestatesupport,industrialandexport-orientedagriculturehas enjoyedhighgrowthrates.AsshownbyAppendini(2014,6),maizeoutputin Mexicohassteadilygrownsince1989,whilethemostdynamicyieldincreases (from2.9to9.9tonnesperhectare)havetakenplaceonirrigatedland,mostlyin theNorthernstates(especiallySinaloa).Thecontributionofirrigatedlandto overallmaizeproductionincreasedfrom25%in1989to40-50%in2009.Average yieldsfornon-irrigatedmaizeinmostpartsofcentralandsouthernMexicohave remainedstableat1.5tonnesperhectare(Appendini2014,6).Intotal,maize productioninMexicohasincreasedfrom14to23.4milliontonsbetween1990 and2015(Appendini2010,3;INEGI2016).Similarly,thecountryhasachieved highgrowthratesforotheragriculturalproductslargelydestinedforexport. Today,Mexicoisamongtheworldleadingproducersandexportersofvegetables andfruitssuchastomato,avocado,watermelon,mango,guava,organiccoffee, squash,andpapaya(Promexico2012).Theproductionofmeat,chicken,milk productsandhoneyhassteadilyincreasedovertheyears(INEGI2016).In2013, Mexicowasthe4thlargestproducerofchickenandthe6thlargestproducerof beefintheworld(INEGI2016).Thetotalvalueofagriculturalexportsincreased from4to26.7billionUS$between1993and2015,whilebothprimaryand agroindustrialexportsincreased(seeFigure1).IncollaborationwithMexican businessassociationsandcommercialbanks,theMexicangovernmentpresents highoutputandgrowthratesinagribusinesstoattractinternationalinvestmentin theagriculturalsector(cf.Promexico2012). 10 5 Inspiteofthismarketconsolidation,localinformalmaizemarketsarestillwidespread,where smallholderssellsurplusesfromtheirsubsistenceorientedproductiontorelativesandneighbours, ortointermediariescomingtothevillages(Eakinetal.2014,144f.). Althoughthestrongstateeffortshavebeensuccessfulinrisingtheagricultural outputandexports,thishasnotresultedinapositivetradebalanceinagriculture. Whileexportshavegrowntounprecedentedlevels,atthesametimeimport dependencywasconsolidated.Theeconomicopeningledtoarelativefallin pricesofagriculturalproductsthatamountedtoalmost60%formaize,45%for wheatand61%forsoy(Calva1999,40).Therehasbeenamassiveincreasein agriculturalimports,andMexicoturnedintooneoftheworld’smainfood importingcountries:In2006,itwasthethirdlargestimporterofcereal(after JapanandtheEuropeanUnion),fourthinoilcrops(aftertheEuropeanUnion, ChinaandJapan),thirdinfiber(afterChinaandtheEU),fifthinmeat(afterJapan, Russia,USandEU),andfirstformilk(Gómez-Oliver2012,241).Afterall,Mexico’s tradebalanceintheagriculturalsectorhasmostlybeennegative(Calva1999,47; Gómez-Oliver2012,242). Clearly,notallfarminginMexicoislarge-scale.Appendini(2014,6)estimatesthat 60percentofmaizeisstillproducedbysmall(21%)-andmedium-scale(38%) producers.However,inthecaseofmaizeasinthecaseofothercropsand vegetables,thereisevidencethatproductionisdominatedbycontractfarming (SteffenandEchanove2005;Appendini2014).UndertheASERCAprogramme,the governmentactivelysupportscontractfarmingthroughsubsidiesforparticipating producersandbuyers(Appendini2014,16ff.).Intheirstudyoncontractfarming inthehorticulture,barleyandwheatsectors,SteffenandEchanove(2005)found that“despitethedisadvantagesofcontractfarmingforgrowers,andthe disproportionalrisksbornbyproducers,theyenterintocontractfarminglabour agreementsbecausetheylackalternativesforfinancing,technicalassistanceand accesstomarkets”.Consideringthatthemajorityofbuyersinthecontract agreementsaretransnationalagribusinesscorporations(Appendini2014,16ff.)6, itisevidentthattheseappropriatethemajorshareoftheincreasingsurplusvalue ofagriculturalproduction. Inthisstructuralcontext,small-scaleagriculturalproduction,althoughstillpresent throughoutMexico,hasbecomeanactivitythatisinmostcasesonlya AlsoseeSchwentesiusandGómez(2002)onthetransformationofwholesaleinMexicointhe contextofthegrowingpowerofsupermarketchainsinthefoodsupplychain. 6 ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. FIGURE 1: AGRICULTURAL AND AGROINDUSTRIAL EXPORTS IN MEXICO , 1993-2015 (SOURCE :ILLUSTRATIONBYAUTHORBASEDONBANXICO2016) 11 ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. complementaryelementinthelivelihoodstrategiesoftheruralandsemi-urban population.Themajorityofincomeoftheruralandsemi-urbanpopulationis todaymadeupofwagelabour,andincreasinglyso(deJavryandSadoulet2001; Verner2005;Scott2010,80ff.;Eakinetal.2014,143f.).Asurveyconductedinthe peri-urbanareaofTolucabyLerneretal.(2012)foundthatthelargestshareof ejidohouseholdscontinuedmaizecultivationonlyoutofsocio-culturalpreference forhome-madetortillas,whilethesecondlargestgroupreliedonmaize cultivationasinsurancestrategyduetotheinsecurityandinstabilityofwagelabourincome.Inmyownqualitativeempiricalresearchconductedin2015/2016 inthesamearea,itwasevidentthatejidolands,ifstillusedforagricultural productionatall,areusuallycultivatedbytheoldestgenerationinthe households,whilemanyhouseholdshavegivenupcultivationeithertousethe landforbuildinghomesfortheyoungergeneration,or,tosellthelandonthe informallandmarketoutofsurvivalnecessity. AtthispointitmustbeclarifiedthattheagriculturalsectorinMexicoalso comprisesaninformalsectorofsubstantialsize,thatis,thedrugproductionand processingsector.Obviouslythesectordoesnotshowinanyofficialstatistics,but itisclearthatitmakesupasignificantpartoftheMexicaneconomy.Itis estimatedthatthesectorhasayearlyexportvalueofUS$19to40billion(Lange 2010;Nájar2010).Incomparison,petroleumexportsamountedtoUS$23billion in2015,whereasthebalanceoftradeinpetroleumhasbeennegativeformost periodssince2008,reachingaminusofUS$10billionin2015(Banxico2016).Even atthemostconservativeestimation,drugexportsareatleastequaltotheincome outofmigrantremittances,whichamountedtoUS$19billionin2015(Banxico 2016).TheparamountsignificanceofthesetworevenuesourcesfortheMexican economywillbefurtherclarifiedbelow.Aftertheabandonmentofruralstate supportmeasuresthroughtheneoliberalreforms,andtheimplementationof anti-drugpoliciesinColombia,PeruandBolivia,thecultivationofmarihuanaand poppieshasturnedintothemajorlivelihoodsourceforlargepartsoftherural populationinareasofNorthernandCentralMexico(Nájar2010;Maldonado 2013).Intheseareas,drugcartelshavetakenoverthestate’sroleinagricultural supportpolicy,subsidisingseed,fertilizers,waterandharvest.Thepresidentof theStateAgrarianTribunal(TribunalSuperiorAgrario)estimatedin2010that30% ofMexico’sarablearea(around8millionhectares)co-cultivatelegalcropswith marihuanaandpoppies(Nájar2010). Insummary,theMexicanagriculturalsectoristodaymadeupofaproductiveand (moderately)growingexportsectortiedtotransnationalagribusinessthat coexistswithasmall-scale,subsistence-orientedorillegalsector. Industry 12 Thedevelopmentoftheindustrialsectorsincethe1990shasbeeninmanyways similartothatofagriculture.UScorporationshadoperatedinMexicobefore NAFTA,and,asmentionedabove,alargeshareofmanufacturingassetshad alreadybeenforeignowned(GereffiandEvans1981,39ff.).However,inthe contextofISI,theyproducedalmostexclusivelyforthedomesticmarket(ibid.; Moody1995,98).Aftertheeconomicopening,Mexicobecamethelargest‘export power’inLatinAmerica,withthetotalvalueofmanufacturedexportsincreasing FIGURE 2: MANUFACTURINGEXPORTSIN MEXICO , 1993-2015 (SOURCE :ILLUSTRATIONBY THEAUTHORBASEDON B ANXICO 2016) However,thegrowthofindustrialexportshasbeenaccompaniedbyanenormous growthintheimportsformanufacturingandtheimportcontentofexports,a trendvisibleforthewholeofLatinAmerica(CibilsandPinazo2016,82f.).This impliesthatlinkagesbetweentheexportindustryandtherestoftheeconomyare almostnon-existentinMexico8(E.Ortíz2016,165f.).Intotal,importedinputs accountfor80%ofexports,mostofwhichcomefromtheUS.Therateiseven higherformaquiladoras,where97%ofinputsareimported(Guíllen2012,68f). ThestudyofthemaquilagarmentsectorbyBairandPeters(2006)foundthatit hasnotcreatedinternalcommoditychains.Mexico’sexport-orientedsectorexists alongsidealocalindustrialandservicessector“whoseratesofgrowthare meagre,havenoknock-oneffectsandbarelyrespondtostimulithatcouldhelpto increaseproductivity”(E.Ortíz2016,166). ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. fromUS$41billionin1993to340billionin2015(seeFigure3).7In2015,athirdof thesederivedfromtheautomobilesector,and84%ofthetotalwenttotheUS (Banxico2016).Aswiththeagriculturalsector,thisstronggrowthhasbeenbased onthemassivesubsidisationoftheassemblingexportindustry,primarilyinthe formoftaxincentivesandtheminimizationofcustomstariffsonimportedparts andcomponents(Guíllen2012,69). Insummary,exportshavemassivelyincreasedinbothagricultureandindustry sincethe1990s,whileimportshavegrownequallyoreventoahigherextent, causinganegativetradebalanceinmostofthetimeperiod. 3.2Agriculture,industryandlabour Besidestheflowsofcapital,classicaldevelopmenttheoriesassumedlinks betweenagricultureandindustrywithregardtolabour.Inparticular,theyheld thatagriculturesupportsindustrializationthrougha)thesupplyofcheapfoodfor labourandb)thesupplyofcheaplabourforindustry.Analysingtheroleoflabour, itbecomesclearthatthepriceoflabourstillplaysacentralroleintheMexican systemofcapitalaccumulation.However,incontrasttothedevelopment Figuresincludeagroindustrialexports. 8 InviewoftheenormoussizeoftheinformalsectorinMexico,itislikelythatthisstatementmust bequalified,takingintoaccounttheroleoftheinformalserviceeconomyforTNCcapital. 7 13 experiencesofEuropeandEastAsia,thefunctioningofthesystemdependson labourremainingcheap. ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. Thepriceoffoodplaysacentralroleincapitalaccumulationbecauseofits influenceonthepriceoflabour(Marx2009,172,551ff.).Itwouldgobeyondthe scopeofthispapertopresentadetailedanalysisofthepoliticaleconomyoffood inMexico(forthis,seee.g.Fox1993;Baker2013).Whatisimportantinthe contextofthisanalysisisthatlabourischeap,butnotprimarilybecauseofa growingdomesticagriculturalsectorprovidingcheapfood.Undercurrent conditionsinMexico,thepriceoffoodisonlymarginallyrelevantforthepriceof labourforcapital,becausethepriceoflabourissubsidizedthroughfourmeans: First,acontinuingandintensifyingtrendofsemiproletarianizationsupporting ‘functionaldualism’(DeJanvry1981);second,increasinggovernmentsupportto thepoorintheformofcashtransfersandfoodaidprogrammes;third,migrants’ remittances;andfourth,increasinghouseholddebt. 14 Firstofall,itneedstobeclarifiedthatwhatissystemicallyimportantisnotthe priceoffoodfortheconsumer,butthepriceoffoodasaningredientofthewage thatneedstobepaidbythecapitalistinordertoensurethereproductionof labour.Theanalyticaldifferenceisimportantsincetheperiodsincearound2000 hasbeencharacterizedbygenerallyhighpricesonworldfoodmarkets(which rapidlytranslatetothedomesticMexicanmarketasitisfullyopen)andin particular,byhighpricevolatility.However,itisevidentthatthishasnot translatedintohigherwages(CONEVAL2007,12).Inthiscontext,itisusefulto recalltheanalysisbyDeJanvry(1981)onthe‘cheaplabor-cheapfoodand functionaldualism’relation(Eakinetal.2014,149f.).ThekeyinsightofDeJanvry’s studyconcernedthefunctionalityoftheco-existenceofsubsistenceagriculture withcapitalistagriculture,astheyarelinkedthroughthe‘semi-proletarian’ householdthatsimultaneouslydependsonthecultivationforsubsistence(and moreorlesscommercializationofsurplus)andonincomefromwagelabour derivedfromworkinginfullydevelopedcapitalistagriculture. “The salaried labor of “free semiproletarians” settled on subsistence plotsoutsidethelatifundio–theminifundistas–constitutesasource oflaborpowerthancanbestillcheaperforthelandlordthanservile labor. In this case two advantages are secured: the possibility of exploiting family labor on subsistence plots that cost the employer nothingandthepossibilityofpayingtheworkerforhiseffectivelabor onlywhenitisneeded.[…][S]emiproletarianization[thus]permitsthe wagestobefarbelowthepriceoflaborpower”(DeJanvry1981:83f.). Subsistenceagricultureisthusanimportantsourceofsubsidyforcapital’slabour costandamajorreasonwhyhigherfoodpricesdonothavetotranslateinto higherwages.Ashefurtherpointsout,semiproletarianizationisfunctionalin peripheralaccumulation,butalsosubjecttoinherentcontradictionsthatstem fromdemographicandecologicalpressuresthatleadtothecollapseofthe resourcebaseofthepeasanthousehold,andmarketpressuresderivingfromthe developmentofcapitalistagriculture(DeJanvry1981,39,86ff.).Thereisstrong evidencethatdepeasantizationhasacceleratedwiththeneoliberalreformsand theeconomicopeninginMexico.TheimplementationofNAFTAcombinedwith thedismantlingofthestateagriculturaltradeagencyCONASUPOcauseda massivelossin(largelyfamilybased)employmentinsmall-andmedium-scale Sinceagriculturehasprovidedlessandlessasufficientsourceofincome,and thereisnotenoughwageemploymentavailabletosubstituteit,otherfactors havebecomeimportantinthesubsidisationofthecostoflabourinMexico,such asmigrationtotheUS.Unemploymentandpovertyhaveledtocontinuously increasinglevelsofbothinternalandinternationalmigrationsincethe1990s.OutmigrationtotheUShasexponentiallyincreasedinthe1990s(King2006,15).In 2014,1.3millionhouseholdsinMexicoreceivedremittancesfromabroad(INEGI 2015).Atanaveragehouseholdsizeof3.8members,thisamountstoaround5 millionMexicanswhoreceivepartoftheirincomethroughremittances,froma totalpopulationof129million. Moreover,thegovernmentrunsaconditionalcashtransferprogrammeforthe poorsince1997,whichalsoincludesfoodaid(formerlycalledPROGRESAand OPORTUNIDADES,nowPROSPERA).Theprogrammeisfinancedthroughloans fromtheIADBandWorldBank.In2016,6.8millionhouseholdsreceivedsupport throughthegovernmentprogramme(GobiernodeMéxico2016).Attheaverage householdsize,thisamountstoatleast26millionpeople.Theprogrammewas criticalasgovernmentresponsetothe2008foodcrisis.Inthecourseofrising foodprices,thegovernmenthasalsoissuedvariousotherfoodaidpoliciesforthe poor,suchasVivirMejor,PAZM,PALandPESA,andfoodpricesubsidiesthrough thestateretailshopsDICONSA(FAO2014,127ff.).Interviewswithofficialsfrom theMinistryforSocialAffairs(SEDESEM),theMinistryofAgriculture(SEDAGRO), andmunicipalauthoritiesintheStateofMexicoprovidefurtherevidencethat governmenttransfersareamajorsourceoflivelihoodforthemajorityofthepoor inMexico.Moreover,itshouldbementionedagaininthiscontextthataccording togovernmentestimations,another500,000householdsdependonincomefrom thedrugeconomy(Nájar2010b). Anothersubsidyforlabourofincreasingimportanceispersonalcredit.Household debthasbeenontheriseinrecentyears,especiallywiththerelaxationofbanking regulationin2006(FINCA2014;BBVA2014;ElFinanciero2016). “Mexico[…]hasexhibitedanenormousincreaseinconsumerlending, not just among microfinance institutions and commercial banks, but 9 Between1991and2007,thenumberofunpaidfamilyworkersinagriculturedecreasedfrom8.3 to3.5million,whilethatofseasonalworkersincreasedfrom1.8to4.7million(Scott2010,75). ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. agriculture,goingalongwithastarkincreaseinseasonallypaidagriculturalwage labour(Scott2010,75,80f.;Fox2013).9However,insteadoffull proletarianization,thishasresultedintheintensificationandconsolidationof semi-proletarianizationsincecapitalistagricultureandindustryhavenotbeen abletoabsorbthenewlyfreedlabour(Otero1999,56ff.;Eakinetal.2014,145f.). Theincreasingdiversificationofincome-generatingactivitiesbypeasant householdsandtheincreasingimportanceofnon-agriculturalemploymentand incomehavebeenatrendall-overLatinAmericaandhasbeencapturedbythe conceptof“newrurality”(foradetailedsummaryanddiscussion,seeKay2008). Arroyo(2002)evenfoundthattherehasbeenanetlossof0.3%inemploymentin themanufacturingsector,notwithstandinga45%productivityincrease.Neither capitalistagriculturenorindustrythusprovidesufficientincometosustainthe livelihoodsofthemajorityofMexicans.Thishasgivenrisetotheincreaseofthe informalsectoroftheeconomy.In2014,around60%oftheMexicanpopulation engagedininformalwork(ILO2014). 15 ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. also payday lenders, pawn shops, and retailers. As early as 2007, Business Week noted that in Mexico, “even Walmart has a banking license.”Newplayersaren’ttheonlyonesfuelingthisgrowth.Credit cards are proliferating, and banks have increased lending limits for many customers. According to Euromonitor, a financial strategy researcher, payday loans alone increased by 100 percent in 2012 (FINCA2014,7). 16 Themarketstudyofthemicrofinanceorganizationgoesontoelaborateonthe increasingover-indebtednessofthepoor,findingthatitwas“increasinglydifficult tofindqualifiedborrowers–peoplewhoseexistingdebtburdenswouldnot impairtheirabilitytorepaynewloans”.Inmostcases,loansareusedtocopewith familyemergencies,suchasdeathormedicaltreatment,orusedforessential needssuchaspayingforschoolequipment(FINCA2014,17f.).Thereport concludesthat“theevidenceshowsanalarminglyhighincidenceandseverityof over-indebtednessandarrearsthroughoutthecountry,andmicrofinance organizationsarerightinthethickofit”(FINCA2014,11). Takingondebtisoftenanecessityduetothecontinuousdecreaseofwages comparedtolivingcosts.Realwageshavesubstantiallydecreasedsincethe1980s (Soederberg2010,82),andwithaminimumwageofMXN73(aroundUS$4)per dayMexicohasthelowestbasepayrelativetopurchasingpowerofallOECD countries(SAT2016;Bain2016).Thebrutalexploitationoflabourisespecially prominentintheagribusinesssector,wherelabourarrangementsaremostly informal,andifformalized,oftendonotcomplywithMexicanlabourlaws (Morvant-Roux2012,10).NGOandmediainvestigationsreportthatnear-slavery workingconditionsarecommoninMexicanagriculture,affectingaround2million farmlabourers,amongthemanestimated100,000children(EscaladaMedrano 2015;Rodriguez2015).Anin-depthmediareportrevealedthatdebtrelations havespurredasanewformoflabourbondage,inparticularthroughemployers withholdingpaymentuntiltheendoftheseasonandchargingexcessivepricesat localshopssellingfoodandbasicnecessitiesinthelabourcampsintheNorthern Mexicanstates. “Many farm laborers are essentially trapped for months at a time in rat-infested camps, often without beds and sometimes without functioning toilets or a reliable water supply. […] Laborers often go deepindebtpayinginflatedpricesfornecessitiesatcompanystores. Somearereducedtoscavengingforfoodwhentheircreditiscutoff. It's common for laborers to head home penniless at the end of a harvest”(Marosi2014). Athalfthe30campsthejournalistsvisitedoverthecourseof18monthsinnine Mexicanstates,“labourerswereineffectpreventedfromleavingbecausetheir wageswerebeingwithheldortheyowedmoneytothecompanystore,orboth” (Marosi2014).Thisisinlinewithasurveyamongagriculturalwagelabourersin thestateofJalisco,whichfoundthattheymostlyincurintodebtwith shopkeepersforconsumptionpurposes,thatis,basichouseholdneedsandcoping withshocks(Morvant-Roux2012,19). Undersuchconditions,thereisenormouscompetitionforscarcejobsinthe formalsector–whichofferbenefitssuchasaccesstobetterhealthservicesanda stableincome-evenifwagesarebelowthesubsistenceminimum.The deteriorationoftheruraleconomyhasthusturnedintothebasisforthemajor comparativeadvantageMexicopossesses(nexttoitsgeography)inthe competitionofdevelopingcountriesforforeigncapitalinflows:anabundant sourceofcheaplabourthathaspracticallybecomepowerlessintheinstitutional structureoftheMexicanstate(Bain2016).The‘cheaplabour’isthepoorthat engageinthevariouscomponentsofthesurvivaleconomytryingtosecurethe livelihoodoftheirfamilies:inpoorlypaidwagelabourintheexport-oriented sectorsofagricultureandindustry,ifavailable;inthedrugbusiness;inmigration totheUStosupportfamilymembersremaininginMexico;andfinally,in ‘relentlessmicro-capitalism’,whichappliestoboththeurbaninformaleconomy andpettycommodityproductioninruralareas(Bernstein2006,457)andoften goesalongwithover-indebtedness. Provisionofcapitalsurplusesfor investmentsneededintheindustrial sector No,duetodrainingofprofitsbyTNCs Earningforeignexchangethroughthe productionforexport Yes,butstillinsufficientdueto increasingimports Creationofahomemarket No,duetolowincomeofrurallabour Supplyoffoodandagriculturalraw materialsforthedomesticmarket (avoidingfoodimports) No Provisionofcheaplabourforindustry Yes ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. 3.3FunctionsofagriculturefordevelopmentinMexico TABLE1:FUNCTIONSOFAGRICULTUREFORDEVELOPMENTINMEXICO Table1summarizesthedevelopmentofagriculture-industrylinksaccordingtothe criteriaestablishedfromtheliteratureinsection2.Itshowsthatinspiteofthe massivegrowthofexportsinbothsectors,inter-sectorallinkagesintermsof capitalflowsarepracticallyabsent.Thisismainlyduetotheincreasingdrainingof profitsabroad–anissuethatwillbefurtherelaboratedbelow.Becauseofthelow incomeofrurallabour,theruralareasdonotcontributetothecreationofa domesticmarket.Foodispartlyproduceddomestically(especiallycorn)and export-agricultureearnsforeignexchange,butimportsstillsurpassexports.There isonlyoneestablishedanddeepenedfunctionalcontributionofagriculturefor industrialization,namelytheprovisionofcheaplabour.InthenextsectionIwill developtheargumentthattheseempiricaltrendscanonlybeunderstoodby takingintoaccountthefinancializationofcapitalaccumulationinMexico. 4. Developmentunderfinancializedperipheralcapitalism “Inretrospect,the1970sseemstohavebeenasdefinitiveamarkerof subsequentstructuralshiftsintheworldeconomyaswasthe1870s,a centurybefore”(Bernstein2010,79). Sincethe1970s,thenationalmodelofcapitalaccumulationinMexicohas transformedintoanaccumulationmodelthatisfullygloballyintegrated, particularlyintotheUSeconomy,andisdominatedbyfinance-ledaccumulation. InthefollowingitwillbecomeclearthatfinancializationinMexicocanbe 17 characterizedasperipheralorsubordinatedfinancialization(Becker2010;Powell 2013).Historically,financializationinMexicodevelopedasaconsequenceofthe debtaccumulatedinthe1970s,andtheconjunctionofUSandMexicanbourgeois classinterestssincethe1990s.Supportedbyinternationalfinancialorganizations andtheUS,theMexicanstatewastransformedtoserveanewaccumulation strategy,whichisbasedontheextractionofwealth.Finance-ledaccumulationhas createdaviciouscycleofhighinterestrates,largeforeigncapitalinflows, increasingdebt,andthedeteriorationoftheproductiveeconomyinMexico. ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. 4.1ThehistoryoffinancializationinMexico 18 FinancializationinMexicoisstructurallyrelatedtotwounderlyingprocesses gainingimportance.First,onthedomesticlevel,andlikeinotherdeveloping countries,theISI-ledeconomicdevelopmentstrategyranintoincreasing problemssincethe1960s:inparticular,thecrisisofbothpeasantandcapitalist agricultureduetotheexcessiveextractionofeconomicsurplusfromagriculture bythestate(BartraandOtero1987),andthelackofforeignexchangetoimport necessarycapitalgoods,creatingchronicbalance-of-paymentproblems(Ernst 1979;GereffiandEvans1981,42;Moody1995,100;Kay2009,18f;Gómez-Oliver 2012,230f.).Theseeconomicproblemstranslatedintoagrowingcrisisofpolitical legitimacyoftheMexicanstate.Thesecondsetoffactorswasglobalinnature. Theeconomicrecessioninthebeginningofthe1970sledUScorporationstolook fornewwaystoincreasetheircorporateprofits.Thecoreofthenewstrategywas theincreasingrelianceoftheirprofitsonsubsidiaries,subcontractorsandthe shiftingofsupplynetworkstodevelopingcountrieswithlowlabourcosts,which wasfacilitatedbyUSforeignpolicynegotiatingforgreateraccesstoforeignstock andbondmarkets(Cox2013,11f.;CibilsandPinazo2016,74).Mostimportantly, thishasbeentakingplacethrough‘MergersandAcquisitions’,whichhave increasinglybeenfinancedbyinstitutionalinvestorsthroughthepurchaseof corporatesharesindevelopingcountries(Correaetal.2012,7;Cox2013,6).Itis thusimportanttonotethattheemergenceoftheTransnationalCorporation (TNC)isintrinsicallylinkedtothefinancializationoftheglobaleconomy,whichwill befurtherclarifiedbelow.Anotherkeyglobalfactorwastheexcessliquidityofoil exportingcountriesafterthe1973/74oilpricespike,whichwerelookingfor investmentopportunitiesto‘recycle’theirenormousrevenuesthroughthemajor commercialbanks(Lipson1981,604f.).Inthiscontext,andintheperceivedneed ofinflowsofforeigncapitalduetothefailedeconomicdevelopmentmodel,the Mexicangovernment(likeotherLatinAmericangovernmentsatthetime) borrowedmassivesumsofmoneyoninternationalcapitalmarkets,leadingtoa doublingofexternaldebtbetween1979and1983fromUS$43billiontoUS$86 billion.NearlyUS$52ofthelattersumwaspublicorpubliclyguaranteeddebt (Marois2014,314).Inordertoserveforeigndebtobligations,Mexicoincreasingly becamedependentonpetroleumexportsinthe1970s.Acombinationoffalling pricesandexportvolumesofoilandthe1979‘Volcker-Shock’–thesuddenraise ofinterestratesbytheUSFederalBank-ledtothe1982Mexicanstatedefault (Marois2012,65ff.),markingthebeginningoftheLatinAmericandebtcrisisand theso-called‘lostdecade’.Thecrisisledtohighunemploymentandthe continuingtrendofdeterioratingrealwages(Correaetal.2012,12). Untiltoday,theMexicaneconomyhasnotrecoveredfromthepermanentstateof crisis,whichhascontinuouslybeenexacerbatedbytheneoliberalreformsand “InthecaseofMexico,atransnationalpoliticalcoalitioncouldemerge more easily than was possible in other contexts due to the historical ties between US capital and Mexican capital, especially in the Maquiladora sector, which had been established as a legal arrangement in the 1960s, and in agribusiness, which large-scale Mexican firms and financial interests were already deeply connected to US agribusiness firms in the purchase of machinery, fertilizer and trade relationships. This process was connected to the ongoing transformation of global agriculture toward more elaborate supply chains that linked to food processing, marketing and distribution networksdominatedbylarge-scaleUSagribusinesscorporations”(Cox 2013,17f.). Asaresultofthis,Mexicobecamethelargestdestinationforforeigninvestment among‘emergingmarkets’between1990and1993,whereas70%ofthe52.8 billionUS$capitalinflowintoMexicowereportfolioinvestments,mostlyinthe Mexicanstockmarket(Soederberg2010,82;Correaetal.2012,13). Atthispoint,itisimportanttoreflectonthekeyroleofachangeinmonetary policyforunderstandingthepersistentcrisis-proneandanti-developmental natureofthefinance-ledaccumulationregimeinMexico. 4.2Increasingextractionofrentthroughportfolio investments ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. deepeningfinancializationsincethe1980s.Theprivatizationofstate-owned enterprisesandbanks(Marois2012)bytheSalinaspresidency(1988-1994) offeredhugesourcesofprofitfordomesticandinternationalinvestmentbanks andcontributedtotheemergenceofatransnationalUS-Mexicancapitalistclass (Cox2013,13).Privatizationwasledbythe37membersoftheMexican Businessmen’sCouncil,whowerepartofthefivelargestprivatizationsamounting for80%ofthevalueofallprivatizationsupto1991(Carlsen1991).Inthedisguise ofMexican‘debtrestructuring’inthecontextofthe‘BradyPlan’10andthe negotiationsoverNAFTA,USfinancialcorporationswereallowedtobuyequity stakesofMexico’snewlyprivatizedfirms.Duetohistoricalpath-dependencies, theformationofthecross-bordercorporateclasscoalitionwasparticularly effectiveinthemaquiladora11andagribusinesssectors. Nexttofinancialopening,akeyconditionalityofinternationalcreditorsinthe debtrestructuringprocessesofthe1990swasthelegalimplementationof ‘centralbankindependence’(PolilloandGuillén2005,1774ff.).Thethreekey featuresofan‘independent’centralbankarepricestability,political independencefromthegovernment,andtherestrictionorbanningofmonetary financing,i.e.governmentfinancingthroughthecentralbank(orinotherwords ‘printingmoney’bythecentralbank)(Carrière-Swallowetal.2016,5f.).As elaboratedinthefollowing,theselegalchangesserveasstructuralbasisforthe The‘BradyPlan’wasdesignedbyUSTreasurySecretaryNicholasBradyinordertoaddress developingcountries’debtcrisisandrestoreglobalstability.Theaimwastoencouragenew foreigncapitalinflowsthroughtheimplementationofexport-orientedgrowthstrategiesand financialmarket-orientedreforms(EMTA2009;Marois2012,74). 11 MaquiladorasareSpecialEconomicZones,i.e.manufacturingplantswhereduty-freeandtarifffreeimportedpartsareprocessedorassembledandthenexported. 10 19 ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. extractionofrentfromtheMexicaneconomybytransnationalfinancecapital, whichfunctionsthroughaninterdependentsystemofforeigncapitalinflows, foreigncurrencyreserveaccumulation,andrisingpublicdebtheldbytheprivate sector. ‘Pricestability’or‘inflationtargeting’hasbecomethekeystrategyforthe instalmentoffinancialrentierinterestsinthecentralbanksoffinancializedcentre andperipherycountries(Epstein2002;Soederberg2010)andispartofthe‘New MacroeconomicConsensus’policyequallypursuedinotherLatinAmerican countriessuchasBrazil,Chile,ColombiaandPeru(DePaulaetal.2013;CarrièreSwallowetal.2016,5f.).InMexico,inflationcontrolwasacommitmentofthe Salinasadministrationtogaintheconfidenceofinternationalinvestors,andwas formallyadoptedin1999(Marois2014,316;Ortíz2016,170;DePaulaetal.2013, 221).Indevelopingcountries,themainstrategytocomplywith‘inflation targeting’intheaftermathofthe1990scrises,whichhasleftmanyeconomiesin LatinAmericaandAsiadevastated,hasbeenthehoardingofthemassiveforeign capitalinflowsinforeignexchangereserves(Gray2006;AizenmanandGlick2008; Paincera2009,2012;Marois2014,321;Ortíz2016).Between2000and2005, developingcountriesaccumulatedforeignexchangereservesatanannualrateof 3.5%oftheircombinedGDP,almostfivetimeshigherthanthelevelintheearly 1990s(MohantyandTurner2006).Thebuildingupofhugeforeignreservesin developingeconomies,whichexceedthereservesofdevelopedeconomiesmany timesoverinrelationtotheirincomeandtrade(Rodrik2006,254),hascoincided withfinancialliberalizationandthestronginflowsofforeigncapitalsincethe financialopening,andinparticularsince2000(AizenmanandLee2007;Paincera 2009).Between1995and2014,theforeignreservesofemerginganddeveloping countriesincreasedfromUS$456billionto8,057billion(US$8.1trillion)(IMF 2016,seeFigure1). 20 FIGURE 3: FOREIGN EXCHANGE RESERVES OF EMERGING AND DEVELOPING ECONOMIES , 1995-2015(SOURCE :IMF2016) Inthemainstreamdiscourse,thismassivebuilt-upofreservesbydeveloping countriesismostlyseenasnecessaryeitherto‘drainsurplusliquidity’createdby themassivecapitalinflowsandinthiswayavoidexcessivelevelsofexchangerate appreciation,oras‘insuranceagainstfinancialcrisis’(AizenmanandGlick2008, 4f;MohantyandTurner2006;Rodrik2006;IMF2016).However,fromacritical politicaleconomyperspective,whichpostulatesthateconomicrelationsreflect socialrelationsofpowerandclass,thephenomenonappearsinadifferentlight. FIGURE4:“STERILIZATION ”OFFOREIGNCAPITALINFLOWS(ELABORATIONBYTHEAUTHOR ) BuildingupaforeignexchangereservemeansthattheCentralBankbuysUSDollarsintheformofUSgovernmentdebt(1)(Lapavitsas2009,15;Labrinidis 2013,21).InordertobuytheUStreasurybonds,itfirstbuysdollarsonthe internationalforeignexchange(forex)marketwithpesos(2).ItthenbuystheUS treasurybondsissuedbytheUSFederalBank(3). Thecruxaboutthe‘sterilization’offoreigncapitalinflowsisthatthecentralbank doesnotbuythedollarswithmoneythatit‘prints’itself(i.e.givestothe governmentintheformofcentralbankmoney)–asmentionedbefore,such ‘monetaryfinancing’wasbannedinthecontextofthestructuraladjustment measuresinthe1990s.12Rather,theforeignexchangeisboughtwithcredit 12 InLatinAmerica,monetaryfinancingwasalsobannedinBrazil,Chile,Colombia,CostaRica, DominicanRepublic,Guatemala,Honduras,Nicaragua,Paraguay,PeruandUruguay(CarrièreSwallowetal.2016,5).AccordingtoofficialIMFdiscourse,‘unsterilizedintervention’intheform ofmonetaryfinancing(MohantyandTurner2006)wouldleadtoareductiononshort-term interestratesthrough‘excessliquidity’,andconsequentlytoinflation(Gray2006,8;Mohantyand Turner2006,42f.;AizenmanandGlick2008,5;Lapavitsas2009,14;Paincera2009;Ortíz2016, 251).However,asGraeberremindsus,thecausallinkofmonetaryfinancingandinflationseems highlydoubtablewithaviewonthe‘quantitativeeasing’pursuedbytheUSFederalReserveand theEuropeanCentralBankwhohave“printedmoneylikemad”inthelasttwodecades,without sparkinganyinflation(Graeber2016,47).Inthislight,theimplementationof‘centralbank independence’indebtorcountriesappearsaspartofcreatingtheconditionsforatransnational elitetoextractwealthfromtheperiphery.Mexicangovernmentbondsareaverywelcomeand lucrative‘investmenthaven’intimesofdesperatelyneededopportunitiesforabsorbing ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. TheMexicancentralbankusestheforeignreservestomanagethetwobasic variablesofeconomicpolicyintheinterestoffinancialinvestors:theexchange rateandtheinterestrate.Ineconomists’terms,thecentralbankimplements ‘exchangeratemanagement’throughthe‘sterilization’offoreigncapitalinflows (Gonzalez2013;L.Ortíz2016).Figure1illustratesthe“sterilization”ofcapital inflowsthroughbuildingupaforeignexchange(FX)reserve. 21 ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. moneythatitborrowsonthefinancialmarketfromcommercialbanks,inthe formofpeso-denominatedgovernmentbonds(4).Thismeansthatinthepast,the governmentborrowedpesosfromthecentralbankcreatedbythelatter.Withthe banningof‘monetaryfinancing’,thecentralbank’sroleswitchedfrombeinga creditortobeingadebtor.Accordingtoatheoryofmoneythatpresumesthatthe creationofmoneycomesalongwiththecreationofdebt(Vernengo2004,16; Graeber2011),thismeansthatthelargestpartofmoneysupplyinMexicoisnot ownedbythepublicinformofthecentralbank,butbyprivatebanks.The problemwiththisisthatforthePesosthatMexicoborrows(theliabilitiesofthe centralbank)ithastopayahigherinterestratethanitgetsfortheDollarsitowns (theassetsofthecentralbank)(5)-whereasthelatterissetbytheUSFederal bankandtheformerbytheBancodeMéxicoitself.AccordingtoForbesMéxico, citingBancodeMéxico,in2013morethan60%oftheforeignexchangereserve wascapitalthatenteredthecountryforthepurposeofbuyingpeso-denominated governmentbonds(GómezTamez2013).Inessence,thismeansthatMexico lendsUSdollarstotheUSAatlowcost(becauseMexico’sassetsarelow-yielding USgovernmentbonds),whileprivateinvestorslendMexicanpesostoMexicoata costlyrate(becauseMexico’sgovernmentbondsareinthehandsofprivate investorsaskinghighinterest).Thismechanismappliestomuchofthedeveloping worldandisamaincauseoftheincreasingnetcapitaloutflowsfromdeveloping countriestodevelopedcountriessincethe1990s,inparticulartotheUS (Lapavitsas2009;Paincera2009).Inotherwords,developingcountriesincurmore debtinordertofinancedevelopedcountries’stagnatingeconomy,especiallythe USasissuerofquasi-worldmoney(Paincera2009,10).ForMexico,ithasimplied thatthatwhiletheDollarreservesaregrowing,thenetpublicdebtisequally growing(Gonzalez2013)(seeFigure2).Itistherebykeytonotethatthecreditors areprivateinvestors,andnotthecentralbank. 22 FIGURE 5: FOREIGN RESERVES AND NET PUBLIC DEBT IN MEXICO , 2000 – 2016 (SOURCE : BANXICO2016) overaccumulatedcapital(onthepopularityofMexicangovernmentbondswithfinancialinvestors seee.g.FinancialTimes2016;TheWallStreetJournal2016). ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. The‘sterilization’oftheinflowingdollarsbybuyingthemandcreatingadollar reservehasturnedintoastructuralconditionduetothecrisis-pronenatureofthe entiresystem.Thecountryisnowdependentontheforeignportfolioinflows (FPI),becausethevalueofthepeso(thatis,peopleinMexicobeingabletobuy anythingwithpesos)isnowfullydependentonthedollarreserves(Gonzalez 2013)(seeFigure6).Iftheforeigncapitalflowsshowsignsofstagnation(asithas beenthecaseacrossdevelopingandemergingeconomiessince2010(IMF2016)), becauseinvestorsfearthatMexicosoonwillnotbeabletokeepitspromises anymoreandactuallypaythehighinterestratethatitset,thiscouldleadtothe chainreactionofinternationalcapitalsellingMexicangovernmentbonds–which wouldsoonresultinabankruptcyofthestateandhyperinflation(whichiswhat happenedinthefinancialcrisisin1994).Inordertopreventthis,thecentralbank usesdollarreservestostabilizethevalueofthePeso,i.e.tobuyPesoswith Dollars,insituationsofdecreasingcapitalinflows(‘exchangeratemanagement’). ThisisthereasonfortherecentdecreaseinforeignexchangereservesinMexico anddevelopingandemergingeconomiesingeneral(seeFigures1and2). FIGURE6:DEPENDENCYOFTHEMEXICANPESOVALUEONFOREIGNCAPITALINFLOWS Thestabilityofthesystemstandsonveryshakygrounds.Thegovernmentalways needstoensurethatithassufficientdollarreservestokeeptheexchangerate stableinmomentsofthreateningcrisis.Momentsofdecreasingcapitalinflows signifythethreateningbreakdownofthesystem.Consequently,thecentralbank raisestheinterestrateinordertore-attractcapitalbyofferingahigher compensationfortheincreasedrisk(ithasdonesoseveraltimesin2016). However,ahigherinterestrateputsmorepressureonthesystem,becauseit meansthatthegovernmenthastopayevenhigherinterestsforthepesosit borrowsonthemarket. “Aslongastheexternalcapitalflowscontinue,thereimbursementof short-termgovernmentbondsandthereturnsobtainedfrominterest rates are ensured, since both depend on the new entry of external capital.Iftheabundanceofcapitalishighandpermanent,thelevelof internationalreservescangrowinspiteofthegrowingdeficitonthe current account, which makes agents believe that such flows are continuous. But the financial dependence also grows, because the financing of the external disequilibrium and, consequently, whether the crisis erupts or not, depends as much on new external capital 23 flowsasonthecontinuationofoldones.Inotherwords,thecredibility of the central bank being able to keep the exchange rate stable and maintain the positive differential between internal and external interest rates depends on the movement of international capital” (Gonzalez2013,translationandemphasisNR). Aslongasinterestratesaresethighenough,themoneywillflow,butatthe expenseofincreasingdebtforwhichhigherinteresthastobepaid. 4.3Financializationandtherealeconomy ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. Thisleadstothequestionofhowfinancializationhasaffectedtherealeconomy andcreatedthespecificstructuressketchedinsection3.Thecausalrelationship worksthroughthemainfeaturesofmonetarypolicy,whichisattractivefor financecapitaltoextractrent,butdevastatingforthedomesticrealeconomy:the exchangerateandtheinterestrate. FIGURE 7: CURRENT ACCOUNT OF MEXICO , 1980-2015 (OWN ELABORATION BASED ON DATAFROM B ANXICO 2016) 24 Figure7showstheMexicancurrentaccount.13Itshowsthatafterthe1994/95 crisis,thecurrentaccounthasbeenincreasinglynegativeduetoanegativetrade balance,serviceaccount,andinparticular,netincome.Beforediscussinghow thesetendenciesarerelatedtofinancializationandwhatthisimplies,itmustbe emphasizedhowcrucialcashtransfers,i.e.migrants’remittances,areforthe Mexicannationaleconomy.Thegraphclearlyshowsthatthesehavebeenthe 13 Thecurrentaccountofanycountryconsistsoffourparts:thetradeaccount(exportsand importsofgoods),theserviceaccount(exportsandimportsofservices,e.g.businessservices, transportation,tourism),thenetprimaryincomeaccount(inflowsandoutflowsderivingfrom investments,suchasdividendsandinterests)andcashtransfers(suchasmigrants’remittancesor foreignaid). onlysourceofforeignexchangewithapositivebalancesincethemid-1990s,and thus(nexttotheillegaldrugmoney)theonlysourceofincomeforthenational economycounteringthemassiveoutflowofmoneyintheothersegmentsofthe currentaccount. ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. Figure8summarizestheaccumulationsystemunderfinancializedconditionsin Mexico.Theprevailingmonetarypolicyhassetinmotionseveralmechanismsthat causethesteadilyincreasingoutflowofsurplusandwealthfromthecountry alongsideincreasingdebtandastagnatingrealeconomy.Thiscausesagrowing pressureinthebalanceofpaymentstoobtainforeignexchangethrough increasingexports,FDIandFPI,furthergearingthesystemtowardscrisis. FIGURE8:THEMEXICANECONOMYUNDERPERIPHERALFINANCIALIZATION Thefirstmainproblemofthelargeinflowsofforeigncapitalinboomphases, triggeredbyhighinterestrates,isthatitcreatesanovervaluationofthePeso againsttheDollar(1),resultinginnegativetermsoftradeforthedomestic economyinrelationtoimports.Itisdifficulttosaywhetherthisismorea‘natural’ effectoftheinflowingforeigncapital,oraneffectofthecentralbank’s‘exchange ratemanagement’(1*).Although‘sterilization’isusedtopreventexcessivelevels ofappreciation14,variousscholarsseetheovervaluationoftheexchangerateas thekeyanchoragainstinflationsincethe1980sreforms(Gray2006,6f;Guíllen 14 Underfinancializedconditions,stronglevelsofappreciationduetolargecapitalinflowsare problematicnotonlybecauseoftheeffectontheexportsectoroftheeconomy,butbecauseit exertspressureontheCentralBanktolowertheinterestrate(Gonzalez2013).Thiscanleadtothe diminishingofcapitalinflows,whichcanquicklyresultinachainreactionofdepreciation (‘overshooting’)(Gray2006,6),shouldmoreandmoreinvestorsloosetrustintheeconomy:In essence,thisiswhatledtothecrisisin1994.Beforethecrisis,thepesowasovervaluedby29.5% (Gonzalez2013).Thismechanismillustratesoncemorethecrisis-pronenatureofthesystemin thattheinterrelationsbetweenexchangerateandinterestrateareextremelydelicate,and entirelydependontheconfidenceofthefinancialmarketintheabilityofthecentralbanktopay. 25 ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. 2012,61;Gonzalez2013;Powell2013,235;Ortíz2016,170).Ingeneral, overvaluedexchangeratesandhighinterestratesareconsideredthekey characteristicsofmonetarypoliciesinfinancializedcountriesoftheperiphery (Beckeretal.2010,229).Thisispeculiarinsofarasovervaluedexchangerates standincontrasttotheIMFandWorldBankstructuraladjustmentdiscourseof the1980s,whichpromotedfreefloatingexchangeratestosupportproducersin developingcountriesinordertoovercome‘UrbanBias’underISIpolicies.Hence, whilemostcentralbanksof‘emergingeconomies’claimtohavefree-floating exchangerates,“thefactsindicateotherwise”(L.Ortíz2016,246).Theeconomy becomesincreasinglyimportdependent,exertingpressureonthecurrent account. 26 Theprevailingmonetarypolicy,whichisentirelyorientedonmaintainingthe confidenceoffinancialmarkets,leadstothesituationthatitismoreprofitablefor (bothfinanceandindustrial)capitaltoinvestinthefinancialsector,i.e.publicand individualdebt,thanintotheproductiveeconomy(Demir2009;Gonzalez2013; Powell2013,141,180)15.Moreover,globallyoperatingfirmsarealsoforcedto participateinderivativesmarketsinordertohedgeexchangerateandinterest raterisk(Powell2013,144).Thissituationleadstothefinancializationofthereal economy(2):Bankshavecutcredittofinanceproductiveinvestmentsofthe domesticeconomy,whilenon-financialsectorfirmsequallyprefertoinvest surplusesintofinancialassets.AsshownindetailbyPowell(2013),Mexicannonfinancialfirms(acrossallsectors)havefinancializedtheirbusinessactivities,in particularsince2000.Thisisreflectedinthesignificantriseintheratiooffinancial assetsascomparedtoassetsheldasnetproperty,plantandequipmentofthe Mexicannon-financialcorporatesector(Powell2013,271).Duetothe financializationoftherealeconomy,fixedcapitalformationinMexico-asinother highlyfinancializedcountriesoftheperiphery–hasfallentolevelsbeyondthose thatUNCTADidentifiedasnecessaryforgeneratingsustainedeconomicgrowth. Therefore,Mexicohasbeenundergoingaprocessofdeindustrializationsincethe financialliberalization(Demir2009,315).Thisexplainsthestagnationand deteriorationoftherealeconomyinMexico(3).Ithasturnedfroman“overdraft economy”orientedonproductiveinvestmentsintoan“autoeconomy”,where companiestrytomaximizetheirprofitsthroughfinancialinvestments(Gonzalez 2013). ThefinancializationoftherealeconomygoesalongwithaconsolidationofTNC powerandincreasingforeignownershipofMexicanfirms(4).Thisisbecausedue totheinterestratedifferential,firmsturnawayfromfinancingthroughbanksin Mexicoandinsteadissuebondsinforeignmarkets.Theconsequencehasbeen twofold:first,ithasledtoafurtherconsolidationofthepowerofTNCs,sincethey haveeasieraccesstosuchsourcesoffinancingabroad.Second,whereMexican companieshavemanagedtobepartofthegameandissuebondsonthe internationalfinancialmarket,theyhavebeensubjecttoatransnationalization themselves,thatis,anincreasingownershipofMexicanfirmsbyforeigners.Thisis reflectedindramaticincreaseinpurchasesofMexicansecuritiesbyUSresidents. ForeignliabilitiesoflargeMexicanfirmsnowrangebetween50and90percent, whilethelevelsaresignificantlylowerforsmallerfirms(Powell2013,249,271). 15 Infoodandagriculture,thisisevidentinthegrowingfinancializationoffoodtraders,processors, andretailers.Financialactivitiesallowthesetransnationalcompaniestosatisfytheirshareholders inthefaceofmeagreprofitsthroughtheiractualbusiness(Isakson2014). „[Hi]ghdomesticinterestratesassociatedwiththeinflation-targeting policy serve the requirements of both international financial capital and domestic capital which holds its liabilities denominated in world money. This has resulted in a bifurcated domestic funding market, with large corporates able to tap cheaper international sources of financing,whiledomesticSMEsareleftreliantonretainedearningsto fund their investment, shut out of expensive credit markets and unable to enter capital markets. With smaller domestic suppliers lacking the funds to invest, large firms turn increasingly to internationalsuppliers,findingthatlocalrivalsareunabletocompete” (Powell2013,304). Insum,theincreasingcapitalinflowstobuy(a)Mexicangovernmentdebtand(b) thefinancializationoftherealeconomycausetheincreasingoutflowofmoney fromtheMexicaneconomy(5),visibleas‘netprimaryincome’inthecurrent account(seeFigure7):a)intheformofinterestpayments,b)intheformof dividendsleavingthecountry.Combinedwiththeincreasingimports,these mechanismscauseastructurallygrowingdeficitinthecurrentaccount(6).In consequence,thepressureonthebalanceofpaymentsiscounteredbythree means(7).Thefirstisincreasinglevelsofdebt,reproducingthedependencyon FPI;thesecondistheearningofforeignexchangethroughtheincreaseofexports; andthethirdisthedrawofforeignexchangeintotheeconomythroughFDI.Next toattractingforeignenterprisestoinvestinstocksofMexicancompaniesandto openproductionfacilitiesinMexico(supportedbythesubsidizationofcheap labourasdiscussedabove),FDIisattractedthroughtheprivatizationofstate properties,naturalresources,andpublicinfrastructure,servicesandpolicies. Sincethe1990s,themajorinvestmentchannelsforforeigncapitalconsistedinthe agribusinessandmanufacturingindustries,andintheprivatizationofstate-owned enterprises,banks,minesandsocialsecurity.Morerecently,thegovernment addedastrategyofcontractingprivatesectorfirmsfortheimplementationof evergrowingpartsofpublicfunctions(Correaetal.2012,13).In2012,seven governmententitiesamountedto42%ofthedebtemittedontheMexicanstock market:TheNationalBankforInfrastructure(Banobras),theMexicanstateownedpetroleumcompany(Pemex),theFederalElectricityCommission(CFE),the statehousingagenciesFOVISSSTEandInfonavit,theFederalMortgageCompany (SociedadHipotecariaFederal),andthegovernmentoftheFederalDistrict (MexicoCity)(ElEconomista2012).Inauthor(forthcomingin2017),Ishowhow housingpolicyhasbeentransformedinordertoextractwealthfromtheworking classes.Statepolicytherebyconsistsinfacilitatingbanks’useoftheworking Oneconsequenceoftheinvolvementofagribusinesscompaniesinfinancialmarketsisthatthey themselvescontributetotheincreasingpricevolatilityonagriculturalcommoditymarkets(Clapp 2012;Murphyetal.2012;Isakson2014;757ff.).Higherpricevolatilityinturntranslatesintohigher premiumsforinsuranceagainstpricerisks.Oneofthepeculiaritiesofstate-facilitatedfinancecapitalismisthattheMexicanstatesubsidizesprizeriskinsurancethroughapriceinsurance programme,whichispartofASERCA,thecommercializationsupportprogrammeoftheMexican MinistryofAgriculture,SAGARPA.Theprogrammebecameespeciallysignificantafter2007andin 2009accountedfor44%oftheASERCAbudgetformaize(Appendini2014,15). ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. TheconsolidationofthepowerofTNCsisclearlyvisibleintheMexican agribusinesssector,whichparticularlyderivesfromthehighmarketconcentration inmarketization(Spieldoch2010;Pons-Cortés2015).16 16 27 classes’personalincomeasasourceofprofit17,andattractingforeigncapitalto thesesortof‘investments’throughsecuritization,i.e.insuringtheinvestments, resultingingrowinghouseholddebt(cf.Lapavitsas2009,18f;Soederberg2014). Mexico’senergyreformofDecember2013,whichopenedtheoilandgassector toprivateinternationalinvestorsandpromotesMexicoasthe“newelDorado” (cf.Gayetal.2014),isafurtherattemptofthegovernmenttoattractFDI.18 5. Conclusion ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. DevelopmentoftheMexicaneconomy 28 Sincethe1970s,thenationalmodelofeconomicdevelopmenthasbeentaken overbyafinance-ledglobalaccumulationregime.Thepaperhastrackedthe mechanismsofthistransitioninMexico,aneconomydefinedthroughits peripheralpositioninthefinancializedcapitalistworldsystem.Thecollapseof Mexico’spublicfinancesduetothemassiveamountsofexternalUS-Dollar denominateddebtcollectedinthe1970shasprovidedthebaseforthe breakthroughoffinance-ledcapitalismafterthe1980sand1990sfinancialcrises. Thisbreakthroughhasstronglyshapedthedevelopmentofagriculture,andits roleinthebroadercapitalistindustrializationprocess.Thestructuraladjustment anddebtrestructuringmeasuresafterthe1980scrisiscreatedtheconditionsfor thefinancialopeningofthecountry,andthetakeoverofrentierinterestsasthe primaryorientationofeconomicpolicy.Amonetarypolicycommittedtohigh interestratesand‘exchangeratemanagement’throughtheaccumulationofa largeforeignexchangereservehascreatedadverseconditionsfortheproductive economydueto:a)anovervaluedexchangerateleadingtonegativetermsof tradeforMexicanproductsvis-à-visUSproducts;b)highinterestratesimpeding accesstocredit;andc)higherratesofreturnforcapitalinthefinancialsector thanintheproductivesphere. Nevertheless,agricultureandindustryhavebothsubstantiallygrownsincethe 1990sintermsofoutputandexportvalues.Ihavearguedthatthenatureofthe developmentinbothsectors,isaconsequenceofthefinancializationofcapital accumulation.Intermsofcapitalflows,thethrivingagriculturalandindustrial sectorsarelargelydelinkedfromeachotherandfromtherestoftheeconomy, sincebothinvestmentsandtheextractionofprofitaremostlycontrolledby transnationalcorporations.Incontrasttotheideathatagricultureshouldbe ‘squeezed’forfinancingindustrialization,transnationalcapitalappropriatesthe largestpartofthesurplusinbothsectors,whileitsproductiveactivitiesthriveon heavystatesubsidies.Ratherthanthestate‘squeezing’agricultureforan 17 Expandingthepersonalcreditmarketisakeystrategyofinvestorsin‘emergingmarkets’,as evidentfromthisanalysisofaresearchfirmoftheratingagencyFitch:“Webelievethaton aggregate,consumerandhouseholddebtinemergingmarketwillcontinuetoriseoverthecoming yearsasamajorityofeconomies-mostnotablyIndia,Mexico,IndonesiaandRussia-stillenjoy verylowlevelsofhouseholdleverage.Whencombinedwithadeepeningofthebankingsector overthecomingyears,still-strongincomegrowthinmostemergingmarketsandfavourable demographics,risingdebthasthepotentialtodrivetheconsumerstoriesinthesecountries”(BMI research2016). 18 Moreover,theenergyreformisseenasnecessarysincetherearehopesthatforeign investmentsintotheexploitationofnaturalgas(‘fracking’)willlowerthecostsofelectricity supply,therebyincreasingthecompetitivenessofthemanufacturingindustry(Alvarezand Valencia2015). Theexport-orientedindustrializationmodelhasnotbroughtaboutbroad-based development,norhasitcreatedtheconditionstodosointhenearfuture.The sectorsareintegratedthroughthereproductionofacontinuoussupplyofcheap labour-notonlydirectlybetweenagricultureandindustrythrough‘functional dualism’,butalsoindirectlythroughtheroleoffinancecapitalinprovidingcredit tothestateandhouseholds.Clearly,thisiscontradictoryandunsustainableinthe longrun,asthesystemworkstowardsthedestructionofboth.Ifitisnotthe developmentofcapitalistagriculturealienatingpeasantsfromtheirlandsand liquidatingfunctionaldualism(cf.DeJanvry1981,39f),itisthedebt-financed natureoffinance-ledaccumulationthatisinherentlycontradictory:First,the financingofthestructurallyrisingcurrentaccountdeficitthroughincurringmore publicdebtwhiletherealeconomyisnotyieldingsufficientsurplusforthestate toredeemitsclaims;second,thefinancingofcheapfood(andotherbasicneeds suchashousing)forlabouron(publicandhousehold)debtthatwillcometoan endwhenthecontradictionbetweenincreasinglevelsofdebt,astagnating domesticeconomy,andbelow-subsistencelevelwagesbecometoolarge.These contradictionsarelikelytoresultinnewfinancialcrisissoonerorlater.Uptonow, thecostsofthecriseshavebeenalmostunilaterallybornebyMexicanlabour (Marois2011).19Thequestionisthusnotonlywhenthebubblebursts,buthow longthecostscanbeimposedonlabourwhenthereislessandlesstosqueeze outofit. Incontrasttothewidespreadview,theMexicancaseexemplifiesthatthe enormousinflowsofforeigncapitaltodevelopingcountries(duetoexport,but mainlyduetofinancialinvestments)havenotbeeninfavourofbroadbased development,buttothecontrary,ledtonetcapitaloutflowsandfurther impoverishment.Theironyofperipheralfinancecapitalismisthatthesystemis dependentonthecontinuousinflowsofforeigncapital,whiletheseare simultaneouslyleadingtoperdition.Sincethestopofforeigncapitalinflowsisthe triggerofcrisis,thestate’srolehasshiftedfrombeingadevelopmentaliststateto adebt-financedcrisismanager.Inordertopayfornecessaryinvestments, subsidiesandbasicoperations,thestatelendsfromtransnationalfinancecapital. Thestatefurtherinsuresinvestmentsoffinancecapitalintostatetasksthatwere takenoverbyprivatefirms(e.g.housing)throughsecuritization.Atthesametime, thestate’sroleconsistsofkeepingupthetrustofinvestorsthatinterestscanbe paid.Therefore,itcontinuouslycreatesnewinvestmentopportunitiesforforeign capitalandmanagesinterestandexchangeratetothebenefitofinvestors, furtheringtheconditionsofperipheralfinancecapitalism. ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. industrializationproject,wecanconcludethattransnationalcapital‘squeezes’ Mexicanlabourtoincurmoredebttofinanceitsextractiveactivities. FromUrban/RuralBiastoFinanceBias In1982,Corbridgedeclaredthat“thecollapseoftheUBtheorydoesnot guaranteethevalidityoftheconceptofruralclassbiasanymorethanthefailure ofByres’industrializationteleologyjustifiesaunitaryandnecessarypathof developmentledbyagriculture”,accusingbothofthinkingintermsof“acrudely dualisticsocialtheory”(Corbridge1982,112).Thehistoryofthepast30years haveproventherelevanceofthisstatement.Theanalysishasshownthatthe 19 Importantly,Maroisalsoshowsthatthesocializationoffinancialriskisanecessaryand constitutiveelementoffinancecapitalism(Marois2011). 29 ElfuturodelaalimentaciónylaAgriculturaenelSigloXXI. urban/ruraldistinctionhasceasedtobeausefulanalyticaltoolforexplaining Mexico’sdevelopmentpathunderneoliberalism.Anovervaluedexchangerate andcheapfoodimportsareimportantcharacteristicsofthecurrentaccumulation regime.However,evenifsuchpoliciesareintheinterestoftheurbandwellers whomakeupthemajorityofthepopulation,andthesubsidizationoffood consumersisstillakeyaspectofstatepolicy,adomesticpolicybiasfavouring urbanfoodconsumersoverruralproducersisbynomeanstheoriginofkeeping foodpriceslow.Thedatahasshownthat-asinmostotherpartsoftheworld– eveninruralareasandamongpeasanthouseholds,peoplearefoodconsumers ratherthanproducers,whichmakestheurban/ruralclassseparationobsoletein thisrespect. Aboveall,theanalysisshowsthatthequestionofagriculture’sroleincapitalist developmentmustbeapproachedfromaworldhistoricalperspective,asthe nationaldevelopmentpathisincreasinglyabsorbedbytheoperationsofglobal financecapital.Itisquestionablewhethertheinterpretationofthedevelopment problem(only)throughanationallenswaseverappropriatetothehistorical realities(McMichael2013,69ff.).Withthebreakthroughofglobalfinance capitalism,itisunmistakablethatthenational-levelrural/urbandistinctionis neitheranadequateconceptualizationforexplainingthehistoricalpathof capitalistdevelopment,norforexplainingpovertyandsocialinequalitiestoday.It seemsthatfinancecapitalisindifferenttotheagriculture/industryand urban/ruraldistinction(atleastonanationalscale),becauseaccumulationworks throughwealthextractionfrom(paidandunpaid)labouratlargebyan increasinglytransnationalandtranssectoralcapitalistclass.Ratherthan urban/ruralbias,themainprobleminfinancializedcountriesoftheperiphery todayisthus‘financebias’.With‘agrariancapitalbeyondthecountryside’and ‘rurallabourbeyondthefarm’(Bernstein2016,642)underfinancialized conditions,itisclearthatagrarianchangeandindustrializationarenotlinked throughthesamemechanismsasintheeraofnationaldevelopmentalism.Oneof thekeyquestionsis,ifthesectorshavedisintegratedcapital-wiseonanational scale,howaretheyrelatedonaworldscale?Questionsaboutwhoproduceswhat onwhichlandandforwhichpurposearecentralnotonlyinviewofan emancipatoryproject(McMichael2013),butalsoanalytically,sincefinance capitalismcontinuestobelinkedtolabourinproductionandthereforecannot decouplefromthepriceoffood.Foodregimeanalysisisthuscentralandmust startfromquestionsaboutchangingpatternsofaccumulationandtheir contradictions(cf.Bernstein2016,639;Friedmann2016,684f.).Forinstance,how dofinancializationandnewmechanismsenforcingunequaldevelopmentona worldscalerelatetofoodandagriculture? Unequaldevelopment,dependencyandclassrelationsunderperipheralfinance capitalism 30 Thediscussionofforeignreserveaccumulationshowedthatitiscrucialtonote there-emergenceofacleardistinctionofcentreandperipherycountriesinthe worldeconomyalongthelinesofissuersandhoardersof‘quasiworld-money’ (Lapavitsas2009;Labrinidis2013).Akeyquestionthisraisesishowwehaveto understandglobalunequaldevelopmentandcentre-peripheryrelationsintheage offinance-ledcapitalism.Ontheonehand,theMexicancaseexemplifieshowthe ‘discipliningregimeofdebt’(Sassen2014)(re)producesperipheralcountries’ positioninthenewinternationaldivisionoflabour,andhowitimpedes investmentsintheproductiveeconomyandcreationoflinksbetweensectorsfor thecreationofemploymentanddevelopmentinthesenseofincreasinglevelsof wealthforthemajorityofsociety(Powell2013).Mexico’sinternaldevelopmentis stronglyshapedbyitsparticularinsertionintotheglobaleconomicsystem, revokingtherelevanceoftheoriesofdevelopmentofunderdevelopment, dependencia,andunequaldevelopmentonaworldscale.Itsdependentstatus therebyseemsevenmorepronouncedthanunderthemodelofnational development.However,thenatureofdependencyisdifferentfromthephaseof nationaldevelopmentalism,inatleasttwowaysthatneedfurtherresearchand clarification.First,atthecoreofthesystemofappropriationfromtheperiphery bythecentreistheextractionofwealththroughthemechanismofinterest. Hence,thecentre-peripheryrelationshipisnotanymorecharacterizedbythe appropriationofasurplusfromtheperiphery,butbypureextractivism.Second, whileitseemsthattherearenewdependenciesalongthelinesofcentreand periphery,thenatureofwhatandwhoconstitutescentreandperipheryarenot clear-cut.TheMexicanstatemaybedependentonkeepinguptheconfidenceof internationalinvestorstoavoid(orrather,postpone)economiccrisis,andstandin competitionwithotherperipheralstatesforthesameinvestments.Butwhoisthe Mexicanstate,andwhoisdependentonwhomorwhat,whentheperiphery’s financialandpoliticaleliteisbecomingpartofatransnationalcapitalistelite extractingwealthfromthecountry?Whatistherelationshipbetweenthe domesticandinternationalcapitalistclass,andwhereandhowhasfinancecapital (not)beenabletoco-optproductivecapital?Whataretheclassdynamicsof peripheralfinancecapitalism?Classrelationsaretodayconstitutedglobally,and attentionneedstofocusonhowtheystructureandreproducepovertyand inequalitywithinandbetweencountries(Selwyn2015). Finally,theanalysishasshownthatwithfinancialization,wehavemovedfurther awayfromthestructuralconditionsthatfacilitatedevelopmentinthesenseof increasinglevelsofincomeforsocietyatlarge.Thisgoesbacktotheaccumulation mechanismoffinancecapitalism:interest.Interestisaclaimonthesurplusvalue createdintheproductionprocess,andinthiswaylinksfinancecapitaltolabourin production(Marois2012,33).Withtransnationalcapitalgainingmorepowervisà-vislabourunderneoliberalism,andperipheralcountriescompetingfor investments,thismeansthatlabourmustbesqueezedmoreinordertosettlethe claimsoffinancialinvestors.Developmentisthereforeunlikelytotakeplace undertheconditionsofglobalfinancecapitalism.Ifnewfreetradeagreements suchasTPPareimplemented,Mexicoislikelytobearolemodelforother countriesoftheperiphery.Financecapitalwillthenpenetratedeeperinto developingcountriestoappropriatemorepublicgoods,naturalresources,and people’spersonalincome.Sincethebalanceoffinance-ledaccumulationisonly temporalbynature,thiswillcontinuouslyexpulsemorepeoplefromsocietyand pushthemtothelimitsofsurvival.Thereisahighriskthatthiswillleadtostrong surgesinmigrationandorganizedcrime–bothofwhicharecharacterizedbythe mostextremeformsofviolenceandlackofhumandignity.Areformofthe internationalmonetarysystemandthede-financializationoftheworldeconomy areasinequanonforrenderingpossiblehumandevelopment,andmustobtain moreattentionbyresearchersandactivistsalike. 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