Download Economy And The Re-Invention Of The Mexican State

Economy And The Re-Invention Of The Mexican State
Stream 18: Postcolonial Stream Proposal
José G. Vargas-Hernández
Centro Universitario del Sur,
Universidad de Guadalajara
ABSTRACT
In recent years, the important role of the State in formulating and implementing economic policies towards achieving
societal growth and development has, broadly speaking, undergone many changes and transformations. In Mexico, the
protectionist, statist and populist regime has been replaced by the so-called neoliberal state model which can be said to
have achieved some impressive results in terms of economic growth and development. Unfortunately, increasing poverty
is one of the most distressing results of neoliberal policies. Further disappointing results include rising unemployment,
slumping incomes, and a widening gap between rich and poor, leading to fissures in society and a fueling of guerrilla
warfare and crime waves. This article focuses on the fundamental concepts of representation, economic functions and the
organization of state models in Mexico.
GLOBALIZATION AND THE NEOLIBERAL STATE MODEL
According to Moctezuma (1997), the debate over current state models evident in the world has evolved through three
different stages. The first stage involved the need for state reform and improvement in efficiency. The second stage
concerned itself with the modifying relations within the states and with issues of an economic nature. At the cusp of the
millennium, the third and present stage is centered on the transformation of the state with a view to a more participatory
society.
Recent events have demonstrated the failure of many economic policies that were implemented, in accordance with the
welfare state model, by various countries following the Second World War. Even the great conservative revolution
initiated by Margaret Thatcher in Britain in 1979, replacing the welfare state model by advancing capitalist principles, has
been challenged by Tony Blair and the Labour Party’s election victory on May 1, 1997.
Neoliberal economic reforms, also known as the “Washington Consensus”, entail public
policies that are directed toward tight fiscal discipline, slashing of social benefits, deregulation and lowering of trade
barriers, and privatization of public sector organizations in order to achieve balanced budgets. Several economic analysts
have expressed concern about the destabilizing effects of the reforms. Sáenz (1997) believes that the contemporary
emergence of ideological divergences and violent manifestations in many parts of the world indicate that the economic
policies of the immediate past and their potential projection into the future will not generate consensus. As Harvard’s
Mangabeira (Conger, 1997) recently put it in an interview, “The opposition in Latin America is in danger of being
represented as a populist backlash of the poor against the rich.” Furthermore, “other critics”, comments Conger (1997),
“are focusing their attention and energy on the allegation that these same reforms have also spawned high unemployment
and a sharp decline in the standard of living for the majority of Latin Americans.”
The state model that emerged from the conservative revolution in Britain has been defined by new economic policies
that promise to “unmask the myths of prosperity that the Tories divulged and which do not coincide with reality” (Tello,
1997). According to Semo (1997), Blair frequently talks about transcending differences between right and left and of
maintaining old loyalties abroad—changes necessitated by this epoch. Thus, the great challenge for the labourists will be
how to manage the process of economic reform initiated and propounded by the conservatives and to simultaneously
satisfy the populist promises made to an electorate weary of two decades of adjustments. Some analysts envision the
birth of a new form of politics which may dominate the 21st century.
Until now, the neoliberal state model seeme d to be the only course, a formula which “promised a dollop of austerity
and little else for the time being” (Kuttner, 1997). The recent elections of center-left governments in both Britain and
France, however, have demonstrated that “Thatcherism isn’t the only path to structural reform” and that a new strategy
and state model can emerge where “growth and job creation becomes possible”, and where a “less austere social policy
would certainly ease the task of structural reform” (Almeira, 1997b). The return of social policy in Britain does, however,
weaken the alliance between the successors of the Thatcher legacy and Washington. Almeira (1997b) notes that several
considerations are necessary for the maintenance of an aggressive military policy, and these include social discipline,
high military expenditures and political insensitivity. These are policies that a social democratic government could not
implement without encountering serious problems.
Recent political events in France witnessed the block formed by the center-left dominating the National Assembly over
the center-right, thereby forming a government which maintains “Chirac nationalism” but which forces it into institutional
cohabitation on the strength of social policy. French Prime Minister Lionel Jospin’s Socialist Party swept to victory in
June 1997, reports Edmonson et al (1997), by promising voters it would create new jobs, slam the brakes on privatization,
keep factories open, and shorten the work week. Even so, the welfare state remains intact in France and the French have
felt relatively little pain from globalization as Javetski and Edmonson et al (1997) recount.
This scenario is in large part due to beliefs “that mankind has been stripped of dignity by the demands of global
economy (Forrester, 1997). Business Week analysts Javetski and Edmonson (1997) sustain that if the Socialists carry out
their agenda, they will increase government intervention in the economy, stall privatization, bolster a costly welfare state,
and tighten labor market rules that are already too rigid. These attempts, however, may not be long lived since much of
the Maastricht politics elucidated in Brussels within the margin of national parliaments have expropriated part of the
sovereign and democratic decision-making powers of governments and imposed restrictions that may well spell the end of
the remaining social policies.
This political process could prove to be very contagious in Europe. The south winds blowing over Portugal, Spain,
Greece, Belgium, etc., have begun to melt the sociopolitical European panorama formed during the Thatcher-Reagan
Glacial Era. Austria, Holland and Sweden, with their left-of-center governments, have demonstrated that “social
institutions need not be entirely cast aside but rather made more competitive” (Kuttner, 1997). Therefore, it is possible
that a backlash could reverberate in those European countries where Social Democrats are in power, militating against
further economic reforms as Javetski and Edmonson et al (1997) have predicted.
As an external force, it is evident that the globalization process is revealing a profound ideological split. Those who
insist that international capital is the only possible frame of reference cannot reconcile their position with those who
refuse to accept that the rule of international capital is inevitable (Almeira, 1997a,b). The main challenge for the former
then, is how to convince voters of the need to face up to the necessities of economic globalization.
The transformation of the State from one state model to another does not always occur in an orderly and smooth
fashion. States that began the process earlier have apparently reached and accomplished certain goals. Britain’s case,
however, contradicts this finding in that theories of public choice that were once accepted are now being revised. It is
also interesting to note the rich processes occurring in France, where there seems to be a reaffirmation of civil society—a
development not identified with any union or political party.
THE EVOLUTION OF THE MEXICAN STATE
A look at developments in Mexico reveals great difficulties. The Mexican government is facing tremendous challenges
15 years after initiating economic reforms oriented toward strengthening the market economy. The trend of revising the
state mission is as apparent in Mexico as it is elsewhere in the world. The pattern of recent political changes shows that
the Mexican State is going through a transitional process. Many conflicts have yet to be resolved among the political
bureaucratic machinery and partisan teams. In fact, the last elections held in July 1997 showed an unprecedented
democratic process of political transformation which will greatly effect the formulation and implementation of future social
and economic policies.
Although economic reforms in Mexico have surpassed expectations, the scope of political reform has been limited and
has resulted in the acceptance, on the one hand, of free market forces, and on the other, of an authoritarian regime which
maintains the three fundamental pillars of the Mexican state: presidential authoritarianism, centralism, and corporativism.
The legitimacy of the Mexican State has decreased considerably over the last few years, giving way to the weak and
erratic growth of social organizations, and the increasing role of political parties and of civil society. This can be
attributed to the economic restructuring process that the Mexican government has undertaken which has both weakened
the state and undermined the fundamental mechanisms of legitimation. Therefore, there is an urgent need to re-establish
an equilibrium between economic policy and political reform of the Mexican State.
There are two political and economic conceptions of the Mexican State according to Labastida (1997): the
revolutionary conception and the presidential authoritarian conception. The Mexican State’s revolutionary conception,
designed following the Mexican Revolution of 1910-17, was proclaimed in the Federal Constitution of 1917 as popular
republican, sovereign representative and with a presidential government limited by legislative and judicial powers. Its
functions included the following: to respect human liberties; to establish and maintain justice and to guarantee human
and family protection by way of material developments founded on the greatest ideals of society. It was a state
conception based on the realities of urban workers, peasants, the middle class, and nationalist entrepreneurs.
This conceptualization of the state bears the greatest guilt for the problems currently inundating Mexican society.
Poverty, underdevelopment, lack of economic growth and unemployment etc., are all remnants of the welfare state. As in
any modern state, it was the best instrument for capitalist expansion. But this is no longer the case. Today, the Mexican
State is the largest and strongest obstacle for expansionist capital and of goods and services which are the basic
necessities of a strategy towards economic globalization.
The second conceptio n of the Mexican State is one that has been evolving for the past 30 years and, according to
Labastida (1997), rests upon a violation of the constitutional state in order to edify a state of presidential authoritarianism.
The main characteristic of this conception is a separation of the people from the government. In other words,
government was transformed into the political operator for the dominant higher classes, remaining relatively local during
the administrations of Lopez Portillo and De la Madrid, and developing an outward orientation starting in 1988 with the
rise of Salinas. Through its illegality and illegitimacy, presidential authoritarianism led to the demise of any and all ethical
foundations for the state. As a consequence, public and private corruption became rampant, corporate structure replaced
democratic life and civil associations, and a bureaucratic hierarchy almost entirely dependent on the executive power’s
titular has become the norm.
Under the first phase of presidential authoritarianism, the so-called period of “stabilizing development”, the Mexican
economy did indeed achieve an impressive rate of growth. It was inequitable, however, and served to broaden the gap
between rich and poor, both at individual and regional levels. Governability was effected through an authoritarian and
repressive political system, as witnessed by the student movement in 1968. Macias (1997) contends that the economy’s
subordination to foreign capital began during this period of “stabilizing development” (1940-1970). This brought about
the unequal development and subsequent marginalization of the larger southern regions of Mexico, where a rise in
poverty and migration took place. The nation’s land and resources were transferred from agriculture, fisheries, forestry
and mining, which are particular to the southern communities, towards subsidizing industrial projects in the center, north,
northeast and northwest regions of the country. The so-called “Mexican Miracle” was therefore characterized by regions
that exhibited extreme poverty existing alongside the more developed ones.
During the seventies an interventionist type of state continued its protectionist policies within a closed-door economy
context, distinct from free market principles, and which generated serious distortions. In the eighties, the forces of
globalization led to an alteration in the strategies of Mexico’s economic development. The International Monetary Fund
(IMF) and the World Bank imposed development and monetary policies based largely on the free market. State
intervention was considered the main cause of the economic, social and political dysfunctions in Mexico.
During the first phase the Mexican state was identified as authoritarian and corporatist as opposed to socialist and
distributive, known as the Keynesian type. The bankruptcy of this corporatist economic model, however, precipitated the
need for new political rules not only in order to guide the activities of the state but also those of the political parties.
Lewis (1997) stated that the traditional adherence to nationalism, economic protectionism, and of one-party rule gave way
to policies that more closely resemble those seen in liberal democracies.
The Mexican economic crisis of 1982 demonstrated that its economic structure had serious flaws. These flaws led to
the exhaustion of the developmental model based on import substitution and the orientation of monetary and fiscal
policies toward public spending. Such policies resulted in a high foreign debt incurred to support large-scale public
intervention, a low rate of productivity growth, a high negative income distribution, a concentration of inequality, an
aggravation of extreme poverty, and structural lags in the economy. Poor distribution of economic development remains
one of the major sources of social problems and political instability. The prolonged economic crisis of the past 15 years
has not only resulted in economic changes, but has also underscored the need for a political and democratic transition.
To what extent the economic crisis has precipitated the need for statewide political reform has yet to be assessed.
Under the second phase of presidential authoritarianism, a new model of the Mexican state, identified as neoliberal,
emerged following the economic crisis of 1982. “Based on integration to the global economy and a downscaling of
government” (Banamex-Accival, 1997), this state model promised to rescue Mexico from the brink of economic and
political ruin. The assumption was that the free market was the best regulator of economic, political, social and cultural
relationships. Within this new model, neoliberal elites appeared to dominate the upper echelons of the political apparatus.
The neoliberal model, however, not only weakens the political autonomy of the state, it also diminishes the state’s
capacity to formulate social policies. The adoption of economic neoliberalism has led to an anti-statist ideology. Thus, the
Mexican State’s structure and functions have been transformed, allowing greater assumption of responsibility by the
private sector.
The most important structural changes experienced by the Mexican State were linked to economic policies congruent
with the new global environment. Some of these include the restructuring of productive plants, the privatization of the
ejido (communal property), the improvement of public finances, the modernization of education, privatization of state
enterprises, negotiation of external debt, deregulation of economy, commercial and financial liberalization and greater
foreign investment. The goals of such changes are economic modernization, the creation of wealth and increased welfare.
According to Conger (1997), the model has achieved “impressive” results. He notes that state-controlled industries have
been privatized, foreign investment has increased dramatically, bureaucracy has been reduced and democratic reforms
have been implemented.
The dismantling of the welfare state in Mexico has been accompanied by a weakening of social and political structures.
This has been especially problematic since the internal dynamics of the state are not yet compatible with neoliberal
orthodoxy. That is, the neoliberal model is dependent upon a form of individualization within social and productive
organizations. Mexico, however, has not yet abandoned neocorporatist structures. Therefore the neoliberal state model
poses a complex paradox within the Mexican State. This has resulted in a mixture of neoliberal and neoconservative
ideology with a heavy pragmatic orientation. Banamex-Accival (1997) testify that “The globalization process currently
sweeping the world only aggravates dependency and vulnerability by dividing the world between producer and
consumer countries.” The same process, however, is also disturbing Mexican society. Conger (1997) contends that the
economic development is therefore characterized by “the breakdown of economies into vibrant financial and industrial
centers and impoverished rural backwaters.” Mexican President Zedillo has agreed that “there is a troublesome dualism
between the dollar-based, export-oriented sector and the peso-based economy.”
As this new financial environment is established and the free movement of capital increases, the interdependence of
states within the global system will increase accordingly. Mexico has been enmeshed in this process for the past few
years. Foreign capital inflows required to fuel development have not been accompanied by investor confidence and
general prosperity due to “poor economic management and government corruption” (Banamex-Accival, 1997).
The “fundamentalist” economic model imposed upon Mexico is based on the promise or expectation that national and
international free markets will solve problems of slow growth and structural unemployment. Sáenz (1997) notes, however,
that the model is ill-equipped to secure integral developmental goals.
The economic policies implemented since 1982— although sacrificing the goal of sustainable economic growth—have
nonetheless achieved substantial reductions in the rate of inflation (price reduction of goods and services). When Mexico
ratified the North American Free Trade Agreement (NAFTA) in 1994, the policy of national self-sufficiency was
completely abandoned. It is important to note that economic distortions were already present at the time; that is, no more
than 800 Mexican enterprises were exporting and the market concentration of the top five exporting firms accounted for
20% of the export value. Meanwhile, unskilled Mexicans in dire poverty numbered approximately 40 million according to
an analysis by Kerber (1997). Therefore, although Mexican exports have grown at an average annual rate of 20%, 80% of
the population “labors in a stagnant, domestic economy and takes home a smaller per capita income, in constant dollars,
than it did in 1980", says Conger (1997).
Market liberalization entailed the indiscriminate infiltration of products and ruthless foreign competition which lead to
the demise of parts of the manufacturing sector and a loss of jobs evident through increasing unemployment. The
discrepancy between the rate of inflation in Mexico, however, and that of its major trading partner, the USA, as reflected
in the balance of trade, foreshadowed the coming of a profound economic crisis that took hold in 1994 and has continued
thereafter.
A PERVERTED ECONOMIC SYSTEM
The moral, political and economic crises of the Mexican State, which can be traced back to the sixties, climaxed both in
1982 and 1994, demonstrating that the economic structure and role of the state needed urgent redefinition. As Macias
(1997) recognizes, Mexico is experiencing a crisis of values in its economic policy and in the daily exercise of public
functions. Cooperative alliances between citizens and special interest groups are hampered by conflicting values and
asymmetric power vis -a-vis the state. This crisis is not only a result of over 50 years of presidential centralism and
unipolar decision-making, leading to a monopoly for power, it is also a product of fraudulent electoral practices.
Corruption has penetrated the very core of government hierarchy, thereby playing a determinant role in the crisis.
The structural weaknesses and vulnerabilities of the Mexican economy became quite evident by 1995. Many of the
policy measures that were adopted to remedy the crisis caused the loss of “millions of jobs and of sources of revenue.”
They further resulted in heavy social and political costs, causing major distortions and ruining hopes for well-balanced
development and growth. These problems seem to have occurred because of the higher priority given to dramatic
economic reforms as opposed to significant political and social change.
Overall, the Mexican State’s economic policy of the last few decades, as noted by Cordera and Orive (1995), has been
characterized by an artificial system of production giving way to capitalistic forces, and of submitting to the vagaries of
the owners of financial capital. In fact, foreign and national groups have been known to manipulate the mass media in a
bid to maintain social control over the market economy.
Due to these changes, the post-revolutionary economic, political and social equilibrium has broken down. A new order
therefore needs to be established. Until now, the economic development model implemented in Mexico has resulted in a
fiscal surplus and a social deficit. The neoliberal policies adopted in Mexico on the advice of the IMF and World Bank
have not met with much success over the past few years. Critics such as Banamex -Accival (1997) acknowledge that “the
last three regimes have dismantled the promotional role of the state, sold out national resources, handed out a major share
of sovereignty, and destroyed our mixed economy, including the social sector.”
Submission to the exigencies of foreign capital meant a lack of attention to the increasing internal social deficit.
Without appropriate and comprehensive political maneuvers to alter Mexico’s future course, economic performance
seems destined to decline. Even the Institutional Revolutionary Party (PRI) recognizes in its economic platform that no
matter how essential economic consolidation may be, it cannot cope by itself with the social costs of development
(Banamex-Accival, 1997).
Not everyone, however, has come out a loser from the Mexican crisis. An old Mexican adage states that “a turbulent
river means gains for the fishermen.” De la Torre (1996) argues that during the eighties, economic, social and political
changes in Mexico gave rise to a new political elite who used neoliberal policies and pragmatic responses to opportunities
offered during the crisis phase as a means to enrich themselves. During the mid-eighties, Meyer (1996) and Centeno
(1994) confirm that a new group of technocrats steadily established power at the pinnacle of the authoritarian pyramid
right up to the presidency. Their ultimate goal was to implement an elaborate project designed to reconstruct the
economic system in record time. A recuperation of GNP would in turn reinforce the feasibility of the authoritarian system
leading to a maintenance of power by a small circle of technocrats huddled around the office of the president.
The unchecked presidential system, however, violates its own mandate (Meyer, 1996). Mexico has a strong presidential
system due to its historical domination by all-powerful leaders dating from the pre -Colombian Aztec Tlatoani emperadors.
This system is all the more evident today. The elite who took power used the PRI to consolidate their economic powers
and influence. And although the technocrats have reformulated several of the Constitution’s articles in order to
incorporate a philosophy of social liberalism as a means of maintaining legality and legitimacy, the system is still not
accepted by broad sectors of the Mexican population and as such is based on very weak foundational supports. Many
Mexicans are pressing the technocrats to abandon the neoliberal economic program. This seems to be a difficult task,
especially when the main macroeconomic objectives include an anti-inflation program, currency stabilization, and a
balanced budget for public spending.
Therefore, there is a major discrepancy between governmental practice and neoliberal propositions, and more
specifically between the authoritarian Mexican political system and the fundamental right espoused by neoliberals to a
democratically elected government. Meyer (1996) notes that changes in the role of the state in economy dissolve the old
capacity of political leadership and at the same time weaken the power of the electorate before an unopposed Institutional
Revolutionary Party (PRI). The 1997 election, however, marked the end of the PRI after 68 years of rule. The presidential
system has also been restricted by the democratic election of governors and legislators gleaned from the opposition.
Meanwhile, plurality of interests has multiplied exponentially from which there has been some government response.
The Mexican State, currently in a phase of transition, have some analysts contending that the contradictory effects of
recent economic, political and social changes in Mexico are due to NAFTA and that there should be renegotiations in
order to deal with problems of poverty, social polarization and potential conflicts in the future. The road to economic
development in Mexico, however, cannot be divorced from substantial power and wealth disparities nor can it occur in
isolation from addressing issues of governability and human rights.
Although there are some counterproductive definitions and uses of the term "neoliberal" (De la Torre, 1996), most of
them adhere to a philosophical, political or economic definition which emphasizes individualism, human rights and
freedom, and the conduction of economics by the market system. Friedrich von Hayek and Robert Nozick are two such
champions and defenders of individual freedoms and human rights. Sérieyx (1994) argues that von Hayek is the interpreter
of integrist liberalism which declares that a good society is one which allows each individual to realize his own potential
without major friction from other individuals, and that therefore there is no objective referent or commonality.
According to Alvarez (1997), neoliberalism, or avant-garde liberalism, consists in the translation of dominion, in a
cessation of rights, and in a change of titular's powers. What occurs is that the state renounces its titular to economic
power which is then delivered to civil society, which is in better condition to exercise it. In this sense, it is civil society
and social participation that plays the most important role towards modernizing both economic and political structures.
The political power controlling the Mexican State, however, has not renounced its loss of control over this process and
instead of contributing towards empowering civil society, it is in fact attempting to gain strength by weakening the
corporate model of social organization. Most of the Mexican State's social and political policies are directed towards the
weakening of any kind of vertical, authoritarian and exclusive corporatist form of social organization.
The term 'neoliberalism is used here to signal the preference for a socioeconomic system marking the conduction of the
whole economy. Neoliberalism’s core, in both of the above examples, is the "market", which according to the
conceptualization of Piazza (1997), is the place where all human capabilities converge either under the form of products or
of potential production—in other words, supply of services expressed as diverse work capabilities. By definition, it is the
meeting place for the exchange of supply and demand, although this place can be interpreted as a social construction or
as a pure natural result.
A vision of public and private powers and thus of the state is related to the economic model sustained by the
neoliberals under two fundamental premises. One is of a physical-mechanical character, and the other is of a moral order,
according to Alvarez (1997). The state is characterized as inefficient, unproductive, unfaithful and perverted while civil
society is vigorous and well-intentioned. Therefore, a civil society regulated by market laws is therefore more efficient in
contributing to social welfare. Under the actions of natural laws and mechanisms such as the "invisible hand", market
action will then lead to the common good and welfare of individuals, although some elements of social Darwinism have
been readapted to the socioeconomic theory, implying substantial changes where individuals struggle with each o ther for
survival. This argument, however, disqualifies equal income, wealth distribution and social justice.
To consider the free market as the perfect and legitimate institution of an open society implicitly enhances the danger
of transforming the state into a totalitarian one. Totalitarian ideologies commonly erect themselves as the source of
supreme truth, unattainable by common humanity and therefore in need of being imposed upon society. Totalitarian ideas
deliberately seek to destroy open societies while the danger of destruction is also made possible when an open society is
exposed to laissez-faire policies.
The neoliberals put forth a two -way strategy: One the one hand, they undermine the activities of civil society and on
the other undermine the traditional functions of the state by assigning a new role via the principles of liberal democracy
and policies of free market relations... as if it was just another private enterprise. All this destruction is done in the name of
a pared-down state for the sake of privatizing its functions. López (1996) argues that the state neither disappears nor
diminishes, but that the neoliberals’ goal is to impose a distinct state capable of destroying civil society's capacity to
exercise resistance and oppose state policies, thereby responding to the interests of globalization and allowing the
instauration of a "New International Order" where collective security rests on the general acceptance of the principles of
free market.
From this perspective, López (1996) comments that it is this very same Mexican State that assumes an anti-state
ideology promoted by government, entrepreneurs, bankers and entities of the neoliberal model. They, in turn, assign an
active role to the state as the architect of its own reduction, allowing a major role to the private sector of the economy in
such a way that they do not compete with each other for financial resources. But at the same time, opposition arising from
the breakdown of social equilibrium and consensus requires that the Mexican State may be the best method by which to
fulfill its functions within the economic model and to guarantee the success of the macroeconomic model. This makes
neoliberalism an uncertain utopia, as it has been proven for the communist utopia .
So far, as a result of implementing neoliberal ideology sponsored by the universality of free market principles, the
autonomy won by the Mexican State’s economy is questionable. Regarding this point, Meyer (1996) assumes that the
strengthening of economic rights must be balanced by the creation of positive rights. That is, it must be balanced by
social rights freely expressing the general will to struggle against inequality in order to solve a gamut a more complete
socioeconomic policy goals . Meyer assumes that the thesis where individuals must always have precedence over
societies and where the solution to their problems is provided by the market’s magic is incomplete and deceiving.
The dominant doctrine in our actual society, according to Soros (1997), is faith in this market’s magic. The doctrine of
liberal capitalism affirms that nothing better serves the common good than the derailed persecution of personal selfish
interest. He sustains, however, that an open society based on a strong ideology stressing individualism could be
threatened both with excessive competence and a lack of cooperation between individuals. At a state level, the
combination of liberal ideologies such as social Darwinism and real geopolitik could result in insufficiencies already
manifested by a lack of recognition of common interests beyond national interests. In other words, the state has no
principles, only interests.
Soros is a heretic according to Bendeski (1997), who argues that the intensification of capitalis t laissez-faire and the
extension of market values to all areas of life are threatening democratic and open society. The market is a more effective
mechanism for resource distribution than state intervention. This does not mean, however, that government intervention
is unnecessary when it comes to reassigning resources or maintaining stability in the market. Thus, the principal enemy of
open society is that very same capitalism. In such a way, an open society has its own imperfections which reside,
accordingly, with the lack of shared values.
Therefore, the crux of the matter regarding the design of the actual state remains the
formulation and implementation of neoliberal economic and social policies. These have a tendency to reconvert old
national states (and subordinated states), sustained as they are by their guardianship over social rights and welfare
policies, towards the centers of international financial power and to new policies which reduce human beings into
functional terms defined by the economic centers of large corporations, as Garrido argues in Chomsky y Dieterich (1996).
Nevertheless, some researchers agree (De la Torre, 1996) that in the near future Mexico will see a decline in critical
voices towards neoliberalism. Despite its limited usefulness and counterproductiveness with regards to the economic
policies of the last and present Mexican administration, the continuation of the neoliberal state model is envisaged. To
support the scenario of neoliberal model continuity, some analysts (El Nacional, February 9, 1994) argue that the
economic policies adopted by the state require that the economic team must be competent, coherent and successful in
creating a political coalition endorsing reform in such a way that it lasts the necessary time needed to produce positive
results and autonomy. Evidently, the adoption of one audacious reform program must carry on with a certain degree of
political risk. A successful economic adjustment need not always find a parallel in politics. Nor is it true that economic
policy reform is consubstantial to ultra-conservative government, because a broad spectrum of political regimes (either
from the left or the right) have shown that all are capable of successfully completing the reform process.
THE NEED FOR CHANGING THE MODEL OF DEVELOPMENT IN MÉXICO
There is a shared political perception that the Mexican State transition, characterized by Huntington as the “third
wave”, started with political reforms in the mid-seventies and was reinforced by the economic reforms following the crisis
of 1982 and the presidential election of 1988. This transition involves an economic and political process whose purpose is
to abandon the authoritarian regime by dismantling the basic pillars of its sustenance, i.e. presidential authoritarianism, of
an hegemonic political party, and of a society controlled by corporativism.
So far, Mexico’s state transition has only been a partial and pragmatic vision of what would be the vision of both the
nation and the state’s econ omic role during the last two administrations. Ayau Cordon (1997) argues that the simple
exercise of defining the vision of nation, and of the general application of norms and their exceptions would serve to
avoid continuous improvisation, to illustrate the magnitude of the task at hand and to reveal its inconsistencies and
limitations. This, he adds, would be an exercise in humility.
Banamex/Accival (1997) recognizes that technocrats are now seeking more efficient neoliberal authorities rather than
substantiating changes in the scale of their economic intervention. In a more recent article, Acosta y Ortega (1997)
concluded that with regard to economic matters, there are very few discrepancies in the economic platforms of the three
main political parties, The Institutional Revolution Party {PRI), the National Action Party (PAN) and the Democratic
Revolution Party (PRD). They offer objectives and an economic scheme that are very similar, differing only with regards
to emphasis. They promote the same propositions on a more just and equitable economic policy based on the
acknowledgment of the relevant market’s role. These include the rejection of a fat and absorbent State; combating extreme
poverty and improving income distribution; accepting the need for foreign investment; outlined fiscal policy as well as
improved vigilance over public spending; less intimidation from fiscal authorities and more promotion of economic
activities; rejection of financial speculation and setting goals towards achieving a lower inflation rate, a lower interest rate
and a stable exchange rate. Even foreign analysts like Pearson (1997) concluded that the major parties’ platforms reflect
the widespread belief that Mexico has little choice except to pursue free-market policies.
Some important economic issues on which the above three parties agree are the acceptance of the North American Free
Trade Agreement (NAFTA), defense, the support and stimulation of domestic and private initiative, and acceptance of
foreign investments as a complement of domestic savings. Although both the PRI and the PAN express the same ideas
and agree on privatization, the PRD criticizes it, arguing that it has favored only a small group of investors. As for
reducing public spending, whereas the PRI and the PAN agree, the PRD proposes to increment it as a lever to promote
development and will push for increases in the public budget for social outlays and for minimum wage. All three parties
agree on the close supervision of expenses and all reject the actual fiscal policy, however, the PAN would try to curb
political favoritism in spending. The PRD and the PAN propose a true autonomy of monetary policy for the Banco de
México and the strengthening of development banks, but are both against the speculative practices of commercial banks.
The PAN also stresses that state reform implies increasing its efficiency and not necessarily its downsizing.
Traditionally, the state activated the economy with full charges and burdens but should now leave these responsibilities
to the private sector. Similarly, the PRI, according to its economic platform, has stated that there is no optimum
government size or ratio of spending to GDP and supports existing privatizations, while the Banamex-Accival report (1997)
states that the PRD points out the need for public participation in strategic, priority and/or natural resource areas. It
implicitly acknowledges a reduced role for the government and does not propose either nationalization or the reversal of
previous divestitures. It only wishes to avoid them in the future and in fact explains its platform would only marginally
increase the GDP participation of public expenditure.
The leader of the PRD, Lopez Abrador, has said, however, that if the opposition wins the Congress in the next election,
his elected members are not going to destabilize the country. He further states: “We are of course going to use the force
of the PRD in the Congress Chamber for political negotiations since we are concerned with removing the sharp edges of
neoliberal politics, but we are not speaking of a radical change. Our mandate is job creation, halting the decline of
money’s acquisitive power and begin its recuperation, as well as to guarantee the right of all Mexicans to health and
education. All of these together, along with the reactivation of productive activities, form an austerity plan from top to
bottom as well as a frontal and deep combat of corruption” Albarrán de Alba, (1997).
An analysis of recent events in state transitions can help to understand the trend towards rejecting neoliberal designs
of public policies. Such have been the cases with both the democratically elected Labour Party in Britain, and the political
block and alliance formed in France.
In this transition, social justice is stressed in the design of public policies. As Blair put it, “Social justice, the possibility
to make all participate in a just society, is a complement of economic efficiency, not its enemy. We do not have to choose
between a less divided society and a more productive society. We can and must look for both. No society can prosper
economically and socially unless all its members prosper, unless we use the talents and energies of all people instead of a
few, and unless we live to the apex of ambition towards creating a society in which the community lives for the well being
of each individual and each individual works for the well being of all.” Semo (1997) concluded that the extreme neoliberal
Malthusianism that conquered British minds and votes is reaching its end. Not an abrupt end, however, but rather slow
and doubtful.
Still, there are some consequences to these events which will affect the democratic transitional changes in Latin
America and Mexico. Until now, the failure of the so-called Neoliberal State and the technocratic class in Mexico has
contributed to further debilitating an already weak country. From an alternate economic point of view, using the welfare
state model to solve actual problems in which the present situation is very similar to the American Depression in the
thirties, the government would have to spend in order to generate wealth. The urgency of changes needed in formulating
and implementing economic and social policies is speeding the transitional process and drowning it in confusion and
conflict the different actors and their particular interests, thus creating transitional dilemmas.
Now is the era for a new, urgent and necessary economic culture for development argues Saénz (1997), as the
synthesis of market and of statism take advantage of all forces of official and particular economic actors in the combat
against structural stagnation. This new approach to an economic model is “neoschumpeterian”, because markets need
complementary mechanisms for adequate functioning in underdeveloped countries like Mexico. Mexico’s markets
operate relatively well, although they are not self-regulated and do not have the resources needed to quickly fill the gap
of development in areas where they are most necessary. The neoschumpeterian development, adds Saénz (1997),
constitutes the most effective instrument towards creating opportunities for the progress of the poorest Mexicans, but
only if the state compensates the tendency of free market to concentrate power.
Thus, one conclusion is that the transition of economic, political and social relations between the Mexican State and
civil society is an imperative which demands immediate attention from the main actors involved. The transition must be
managed and controlled by the State which, however, still has an important leadership role in conducting change and
creating the necessary economic, social and political institutions, and in formulating and implementing public policies and
strategies towards achieving development, thereby closing the gap between efficiency and equality, human rights and
social justice. In this sense, the transition can trace the characteristics of the new state model signaled by Nicos Poluntzas
(1968) as the cohesive factor between divergent social classes, as the regulator of equilibrium among productive factors
and as the condensation center between the social and economic resources of the system as well as the increasing
demands for employment, income and social welfare.
The Mexican State has been designed in the past century under two different economic models, the so-called Welfare
State and the Neoliberal State. The economic policies derived from these two structural designs of the Mexican State have
both shown dysfunctionalities. Both models manifested general social and economic inequalities, although the neoliberal
state has in fact deepened these differences, its failures being inherent within its own nature. According to Meyer (1996),
it must be recognized that the principal limitation of today’s policies neither resides in the efficiency of program nor on the
magnitude of its expenses. Rather its fundamental failure rests with the fact that the economy generates inequalities that
once crystallized prove difficult to remove.
A feasible transition towards a new level of development and growth implies not only economic but also effective
political reform devoted to building new patterns of public behavior that will sustain a frontal combat to the traditional
characteristics of the Mexican system: corruption, presidential arrogance, an authoritarian heritage, unipolar decision
making, lack of social participation in public decision and policies, intolerance, outdated schemes of social, political and
economic relations based on corporativism, patronage and political bosses (caciques and caudillos, etc.) Therefore, any
agreement of economic and political transition has its own risks. While the economic transition needs a long-range
process to restructure the economy, political transition is also urgently needed. It seems that the actual transition of the
Mexican State persists only on a transition agreed, as López (1996) sustains, “among traditional anti-state forces who not
only seek the survival of the actual political regime, but als o its reconstruction. That is, a transition without institutional
rupture and which guarantees the authoritarian heritage.” Thus, the neoliberal anti-state ideology is the best instrument
of domination for international economic interests.
The most relevant reforms must be directed at a much more profound level so that every citizen can be a dynamic and
creative agent of change for moral, social, political and economic values and attitudes; one who is capable of making
decisions and of taking full responsibility and accountability for his or her decisions within the context in which he or she
operates and develops. Only when the State is designed with this theory of pure and impure forms of government and
with the importance of human happiness in mind, will the transition become legitimate. As Aristotle wrote: “The most
perfect State is evidently the one in which each citizen, whoever he be, can within the law practice the best possible
virtues to better secure his happiness.” This is the cornerstone for further political and economic transition toward the
development and democratization of social organizations, with independent criteria and performance from the ideological
and administrative apparatus of the Mexican State.
CONCLUSION
A developing country like Mexico might arguably fit what the pragmatic Easton (1965) stated about how the
modernization of the state relies on the cybernetic exercise of demand-response, although a more systemic approach by
the state could work better. In the end, a transition towards a more feasible model of the Mexican State must establish a
break-even point of its regulatory action and efficiency in order to formulate and implement policies that respond to the
challenges of market dynamics, social participation and political stability. That is, the role of the newly emerging Mexican
State, if it wishes to recover democratic legitimacy, must be one that checks and balances market dysfunctionalities by
implementing social policies via its social functions.
In fact, recent developments have questioned the relevance of social policy to the state. For example, Rodrik (1997)
argues that any state which makes substantial advancements in external market liberalization, such as Mexico, has a
greater risk for social instability due to different factors. He also explains the main obstacles any state has and will have
towards achieving a proper socialization of risks and costs, leaving the less privileged social groups to confront the new
increasing integration of the economic environment.
The Mexican State’s economic, political and social crisis has only one possible way out, and that is the democratic
legitimization of its public policies, achieved only by social participation in the institutions of governments and public
management. This assertion coincides with what Mangabeira and others advocated as a “democratized market economy.”
Thus, the re-invention of the Mexican State must respond to demands from a society that has been under rapid
transformation, changing values and an identity crisis in order to adapt to recent developments in global economic
trends. Strategies for the re-invention of the Mexican State must be directed towards the impact of optimal economic
development and to strengthening social character in such a way that the challenge is also in favor of preserving national
historical character and values.
At this point, however, the Mexican State must exercise more efficient capacities towards carrying forward economic
policies with broad regulatory faculties accompanied by social policies directed toward reducing inequalities as well as
the costs of external development. Therefore, a sustainable and equitable development are the two main challenges of the
Mexican State, otherwise any instituted reform will be foredoomed to failure.
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