Tropic of Chaos_ Climate Change and the New Geography of Violence - Christian Parenti [91]
In exchange for cooperating and negotiating with trade unions, Mexican capitalists were allowed to form monopolies and cartels. They were also forced into state-managed business chambers. The state supported business with subsidies, protective tariffs, and regulations designed to blunt the most ravaging effects of unbridled interfirm competition and protect Mexican companies from foreign rivals. Partial state ownership allowed stronger sectors of the economy to support weaker sectors.42
The state provided cheap and stable credit as “foreign ownership of the banking system was progressively replaced by national and state ownership.” 43 The new credit system facilitated “the progress of the agrarian reform” and developed a crop-based, rather than land-based, credit system for small individual proprietors and “peasants holding communal lands in villages.” By these arrangements they could access ready credit, but communal lands would not carry mortgages or be foreclosed on.44 Meanwhile, trade unions won legal rights, although organized labor’s more radical elements were marginalized. Union agitation and collective bargaining increased wages, which in turn spurred consumption and the growth of internal markets, and that encouraged more productive investment, creating further employment, consumption, profits, and so on.45 All these progressive reforms allowed Mexican industry to compete with the more powerful British and American interests that had dominated business and trade (but not agriculture) under Porfirio Diaz.46
Cárdenas and Oil
This Mexican version of corporatism deepened significantly in the late 1930s under President Lazaro Cárdenas, who accelerated land reform and the nationalization of basic industry. “The assumption underlying Cardenas’ policies was that while capitalism was necessary for development, capital, like labor, could be controlled and regulated by the state.”47 Cárdenas “emphasized programs to improve the lot of the lower classes, especially the Indians, through education, redistribution of land, collective farms (ejidos), curbs on foreign capital, and a larger role for state-run enterprise.”48
By 1937, Cárdenas had nationalized the railroads and set his sights on the ultimate prize: petroleum. That brought him into direct confrontation with Standard Oil of New Jersey, Shell, and the US government. But Cárdenas prevailed and expropriated the Mexican operations of the international petroleum firms to create the state oil company Petróleos Mexicanos, or Pemex.49
But the system had its problems. By centralizing power and excluding, but not smashing, capital, the Mexican state opened the way for serious corruption. The idea was that the state should be the “rector of the economy.” Business was excluded from politics and denied access to decision-making circles; owners of private businesses were not even allowed to be part of the ruling party.50 Yet, formal exclusion of the private sector from official channels of influence encouraged businessmen to cultivate informal influence and access. Corruption and clientelism resulted.
By the 1960s, some industries had founded autonomous chambers that opposed state involvement in the economy. The most powerful of these were the Businessmen’s Council, formed in 1962, and the Businessmen’s Coordinating Council, created in 1975. Within these elite factions, pressure for a rightward turn in economic policy would grow.
Oil’s Cursed Boom
The corporatist model fell upon hard times during the 1970s. Sagging growth and rising inflation were coupled with increasing public debt. At the same time, an oil boom began to distort the Mexican economy. In 1973, just as new oil reserves came into production, prices