CHAPTER 1

INTRODUCTION

This paper focuses on the transitions in Mexico’s political institutions and in the government’s economic policies from the 1970s through the end of the Salinas de Gortari administration in 1994. During this time Mexico made important transitions from its revolutionary political model and its post-World War II development model in the name of modernization. I will explore the roots of those models; examine their successes and shortcomings; and explain how they led to a political and economic crisis in the early 1980s. As a prelude to those events, I feel it is important to describe the foundations of the Mexican political economy.

Consequently, I devoted the first two chapters to a discussion the formation of the Mexican political system in the wake of the 1911 Revolution. Integral to this discussion are the underpinnings of the “presidential” system; the state-directed economic model; and the mechanisms of popular inclusion and control.

The government’s post-revolutionary structure reflected Mexican traditions of patron-clientism and authority, and these traditions found expression in the post-revolutionary institutions. Mexico’s political institutions and economic model were closely interrelated, and evolved together. Consequently, the political goals of achieving national identity, central authority, and the inclusion of previously marginalized sectors of society shaped Mexico’s institutions. They also shaped Mexico’s economic policies. Because the economic development model was tightly integrated with the country's political model, Mexico’s economic policies were heavily influenced by the political priorities of the ruling Party. Consequently, the economy's successes and failures have had political origins.

Mexico’s first century of independence from Spain was marked by regional isolation, class conflict, frequent pronuniamientos against the central government, and a general disregard of central authority.  The founders of the post-Revolutionary model were concerned primarily with establishing central authority and the peaceful transition of power from one presidential administration to another. To that end they limited formal political representation to a group of official sectors and political elites referred to as the Revolutionary Family. The post-Revolution government fulfilled its revolutionary mandate by formally organizing and including sectors that represented the interests of the workers and the popular classes. It sought to established a broad base of support among the working classes and the peasants, or campesinos, by including them in the political system through their incorporation into formal sectors. It also took on the role of broker and peacemaker between these official groups, who were formally included in the party of the revolution – the PRI or Partido Revolucionario Insitucional. The popular and working classes gained access to the Party through their sector leaders who were appointed by the government and given official recognition in the Revolutionary Family. This institutionalized a method of incorporating popular groups through officially prescribed channels, providing them with a “corporate” identity and a seat at the table of the national government.

The post-revolutionary model relied on the exercise of presidential authority to hold the various sectors together; to reward their cooperation with the regime; and to discipline them when necessary. The result was a system of limited political pluralism and government by consensus with a group of official groups, who operated under the authority of the president. This “presidential” system gave the president himself – not the executive branch – wide discretionary power to govern and exclusive authority over the process of selecting a presidential successor. Mexico’s government has not historically been concerned with goals of today’s liberal democracies: openness, democratic processes or public accountability. These elements were largely absent in the presidential system. Instead of constitutional authority, Mexico’s presidents relied on economic rewards and the judicious application of force to minimize dissent and keep the Revolutionary Family together. Control over economic resources became an essential feature of this model, as it allowed the distribution of rewards such as higher wages, government contracts and subsidies to function as a stabilizing mechanism in the absence of democratic political processes.

President Plutarco Calles established the Mexican regime in 1929, but authorship of the consensus political model really belongs to his successor, Lázaro Cárdenas, who was president from 1934 to 1940. He established the system of corporate representation mentioned above, and with it the leadership and patronage role of the new government. That role was consistent with the authoritarian features of a presidential system, and extended the president’s political authority to economic policy. That policy took the form of a nationalist development project in the late 1930s. Cárdenas initiated this nationalist project in dramatic fashion in 1938 when he asserted Mexico’s rights to the country’s subsoil resources and appropriated the assets of foreign oil companies. Mexican presidents would subsequently use those resources to establish the state’s economic base. Oil provided a large and readily-available source of wealth for development, and Cárdenas’s action made it legally possible for the Mexican state to put those resources in the service of the state.

Mexican presidents were quite successful in directing economic growth and industrializing their nation’s economy from World War II through the end of the 1970s – a period known as the “Mexican Miracle.” Making allowances for the fact that many of Mexico’s citizens were separated by geography and marginalized by poverty or culture, the benefits of growth were spread more widely than at any time before. The peasants, the urban working classes, the middle class, and a rising class of industrialists all benefited. The ability to direct development and distribute wealth was key to the PRI’s ability as the official party to hold a monopoly on political power for just over 70 years.

The economic model served an agenda that was both nationalist and “revolutionary.” It was based on growth and distribution of wealth for political stability, and for the establishment of a financially independent Mexican state. In pursuit of this goal, it shielded its industry from foreign competition through tariffs, and made the government owner, financier and director of large segments of Mexican industry. Cárdenas created state monopolies in “strategic” industries such as oil, transportation and utilities – the beginnings of a large economic sector owned by the state and controlled by the Mexican president.

The state’s involvement in the economy integrated economic management with political policy. Consequently, the political priorities of the each presidential administration revealed themselves in a pro-development agenda, with concessions to various relevant political sectors. Domestic corporations received subsidies and tariff protections; labor unions received relatively high wages and benefits; and public companies were operated to maximize employment and to protect domestic producers. The state became a strong bargaining partner for labor, and forged a patronage relationship with powerful unions. Although effective for several decades, the state development program was insulated from the discipline of competition, and operated very inefficiently. It became overly dependent on oil revenue, and when oil prices plunged in the 1980s, the foundation of the state was shaken. Mexico found itself financially over-extended, and would teeter on the brink of economic and political crisis.

The government defaulted on its external debts in 1982, creating the opportunity for an aspiring middle class of entrepreneurs, professionals and business owners to challenge the viability of the state-led development model. The response of the reformist presidents of the 1980s and 1990s to that crisis was to initiate orthodox economic reforms that would have a complimentary effect on Mexico’s political institutions – changing them significantly, and perhaps forever. Just as the political and economic models had developed together, they changed together.

The transition of the economic model from redistributive to orthodox mirrored the political reforms in the aftermath of the financial crisis of the 1980s. Democratization of the Party and the government were inextricably linked with efforts to liberalize and privatize Mexico’s industry. When the Salinas de Gortari administration took office in 1988, the country had suffered six years of painful austerity measures, and the regime’s legitimacy had been undermined by the fraudulent election that put Salinas in office. In a time of crisis the new Mexican president acted boldly to liberalize the country’s economy. He abandoned important elements of Mexico’s import-substitution policies, and signed a free-trade agreement with the U.S. and Canada.

Following the economic collapse of the 1980s legitimacy could no longer be sustained by the traditional methods of purchasing patronage. The effort to secure a new source of legitimacy and political stability led the regime to reform the process of electing Party officials; to allow greater participation by opposition parties in the Mexican congress; and to permit more open and honest elections. Economic reform led to political reform. The PRI had enjoyed a position of political dominance since its creation as the umbrella party for the Revolutionary Family in the 1930s. Now, in the aftermath of a decade of economic austerity and popular unrest, the Party was forced to allow greater participation by competing parties on the left and right.

Dissatisfaction with PRI hegemony eventually led to the Party’s loss of the presidency in the 2000 presidential election. When Vicente Fox, the candidate of the PAN (Partido Accion Nacional), took office that year it was the first time an opposition party had held the presidency since the inception of the PRI in the 1930s. Did it represent the fall of the PRI, or the triumph of a system that was deliberately designed to provide, above all else, for the peaceful transition of power between regimes?

CHAPTER 2

THE BREAK WITH THE PAST:

FORGING A NEW POLITICAL MODEL

To understand the logic of the Mexican political model, it is helpful to keep in mind the cultural attitudes toward authority and government created by Mexico’s history. Group identity, regional and personal loyalty, and the expectation of a natural hierarchy of power combined to produce a political culture, and hence a political system, much different than that of the U.S.. The system that endured from the Revolution of 1910 until today is one that drew on deep historical traditions of authoritarian government and on patron-client relationships between the government and its subjects. These traditions had their roots in Mexico’s colonial history. The tradition of political authority was an outgrowth of Spain’s administration of colonial New Spain from the sixteenth through the eighteenth centuries. It was a hierarchical system of both political authority and social caste.

The plantation or hacienda economy had a complimentary tradition of authority and patronage between wealthy landowners and their laborers. The links of authority and patronage would carry over into twentieth century politics as bureaucrats and business elites emerged to occupy the privileged place of the hacendado. The colonial dependency relationships did not pass away with the colonial regime, but were re-instituted between the revolutionary government and the official sectors of society.

The transition from the colonial order to modern statehood was long and violent for Mexico. The old patronage relationships broke down in the late 1800s as the factory and the plantation displaced peasantry and “proletarianized” the urban workforce. Under the dictatorship of Porfirio Díaz, Mexico’s upper classes embraced western culture and technology, applying mass-production methods to the mining and textile industries, and introduced the working conditions of the nineteenth century factory to the Mexican people. Railroads penetrated the interior of the country, opening land formerly held by indigenous communities to speculation and development.

The displacement of the peasantry and rise of regional caudillos generated a conflict that engulfed the entire country between 1911 and 1917. Mexicans date the start of the Revolution from November 20, 1910, when Francisco Madero called for a national insurrection against Porfirio Díaz. Madero’s declaration against Díaz is embodied in the Plan of San Luis Potosí, in which he refers to the “intolerable” force of tyranny in Mexico. This power, “based not in law but in force,” perpetuated the privileged position of an influential minority who enriched themselves at the expense of the country.[i]

The Revolution was powered by the impulse to displace this minority and give voice to the working classes for the first time in Mexico’s history. For that reason, the Revolution became a powerful symbol in Mexican society – a symbol that the ruling Party used to solidify its claim to represent the Mexican people, and to justify its claim on their loyalty. The Porfiriato itself ended swiftly with the resignation of Díaz in May, 1911. He fled to France and the various factions competing for control of the Mexican government fell into conflict with each other. It is from this period of revolution that we know the now-famous names of “Pancho” Villa, Emiliano Zapata, and Venustiano Carranza, who organized the Constitutional Convention of 1917.

The Party was the instrument of national power, but the president was the authority over the Party. For one six-year term each president was the leader of the Party and the head of the Revolutionary Family. The Congress, the courts, the state governors, all owed their allegiance to the executive. In fact, they owed their allegiance not to the office, but to the man himself, as Mexican presidents ruled by personal authority, wielded freely and often arbitrarily. As Madero put it, the judges “instead of being the representatives of justice, are the agents of the executive.” Consequently, there could be no effective challenge to executive power, as no opposition could achieve legal status. No Mexican had “recognized political standing” that was not granted by the president.[ii]

The irony of Madero’s statement is that it was a genuine proclamation for democracy and at the same time a prophetic condemnation of the Mexican state as it would evolve in the post-revolutionary era. The Revolution deposed Porfirio Díaz, and then fell into a six-year power struggle between regional militias. The Constitution of 1917 would end both anarchy and dictatorship, but the presidential system would survive in the post-revolutionary model. Executive power would fall to the PRI, and to each president’s hand-picked successor. In fact, the Constitution itself defined and legitimized the Presidential system by vesting “supreme executive power” in the office of the president – a feature that was both necessary and contradictory to the goals of the Revolution.[iii]

Many aspects of the Mexican Constitution have been honored in the breach, as the saying goes. It did provide a statement of principles that led the Mexican state toward land reform; included the workers and the campesinos in the new government; and placed the stewardship of the nation’s economy in the hands of the government. Reflecting Mexico’s history with concentrated land ownership, the Constitution specifically placed the property rights of communal ejidos above those of individual landowners, and provided rather specific guidelines for the subdivision of lands. It addressed the concentration of economic power that had characterized both the colonial period and the Porfiriato by asserting that “the law shall punish severely” any act that prevents “free competition in production, industry or commerce, or services to the public.”[iv] This statement should not be mistaken for a proclamation of free market principals, but instead as a revolutionary challenge to the concentration of economic power in the hands of a privileged class.

Having defined the presidential system, the Constitution fulfilled its “revolutionary” obligations by incorporating economic rights into the charter. Under Title VI, which deals with labor, the document guarantees a number of rights that are honored in the breach. Among them: an eight-hour work day; a prohibition against child labor (under the age of 14); maternity leave with pay; a minimum wage judged to be sufficient to live on; and an entitlement by the workers to a portion of the profits of the country’s enterprises. The Constitution also recognized the legitimacy of strikes in “harmonizing the rights of labor with those of capital.”[v] These are economic “rights” that Mexican workers still do not have today. Even the political right to strike was permitted only to the extent that it did not disrupt the government’s economic agenda.

This was one of the constitutional rights most clearly abrogated by the Mexican government in future years, as it chose to recognize only strikes called by officially recognized unions, and the official unions had government-appointed leadership. Unofficial strikes would be declared illegal, and troops would be sent in to keep the factories running. This contradiction between the state’s role as employer and protector of the workers would require a careful balancing act during the decades of industrialization after World War II. The irony of this dual role would be revealed in the 1980s when the interests of the unions would come into direct conflict with the interests of the state, and the working classes would find themselves petitioning the state to act against its own interests.

The Revolution displaced the landed class with an aspiring class of new landowners that was mostly native born and of mixed blood. More importantly, it created the opportunity for centralization of power and development of national loyalties. One of the challenges facing post-revolutionary Mexico was to create a sense of national citizenship to displace regional, personal, and village loyalties. Mexico’s revolutionary leaders struggled for two decades to create a political model that would accomplish this by giving the Mexican citizen a sense of national identity, and in doing so legitimize the authority of the national government. The creation of that model was an important transition in a century that could be defined by transitions as Mexico made its way from a rural, agricultural and disunited country to one that was urban, industrial and unified.

Consequently, after the Mexican Revolution the country faced the task of re-creating its governmental institutions. From the structures of the colonial administration and the regime of Porfirio Díaz, Mexico’s revolutionary leaders remade the country in many ways that show they were concerned to remedy the instability that plagued the nineteenth century. The first reaction to the past was the institution of a prohibition against the re-election of a president. Part of the reason for the success of presidentialismo is the institutional prohibition against reelection. The president is the supreme power for only six years, and must step down in favor of his chosen successor. This reflects a commitment to preservation of the office at the expense of any individual’s policies, and guards against a presidential dynasty that would overshadow the office itself.

The first president of the post-revolutionary period, Francisco Madero, envisioned a presidency with wide powers but a limited time in office. He insisted on a presidential term without possibility of reelection as a way to guard against another prolonged dictatorship, such as that of Díaz; or against a battle between presidential successors and ex-presidents, such as occurred in the years following independence from Spain. Madero’s prohibition on presidential re-election became an important cultural taboo that was never broken by the ruling Party. The certainty of a presidential sexenio not only contributed to the peaceful transition of power but was an important symbol of the regime’s loyalty to what one historian called the “mythology” of the institutionalized revolution.[vi] Madero’s campaign slogan, “Effective Suffrage, No Reelection,” was stamped on state documents until the 1970s.[vii]

The ability to unify the disparate elements of Mexican society and incorporate them into the national government was the final triumph of central authority over regionalism. The system was designed to be inclusive, rather than democratic. It was designed to institutionalize the peaceful transition of government authority. That authority – stronger than any local caudillo – that would be the patron of the poor and the working classes. It would provide the economic benefits promised in the Constitution. Madero’s mandate for the new government was to guard against either a lapse into regional conflict or another prolonged dictatorship. With that mandate in mind, post-Revolution regimes sought to re-establish a patronage relationship with the peasants and working classes in order to give the new government a wide base of popular support. The new model would be a remedy for both Mexico’s history of political instability and the exploitation of the powerless.

Lázaro Cárdenas would become the final architect of that model. He created corporate associations within Mexican society, and brought them into a formal arrangement with the federal government, as members of the Revolutionary Family. He created the Confederación Nacional Campesina (CNC) to organize and give an official voice to the countryside. To make room in the government for the expanding urban middle class, he organized the Federación de Sindicatos de Trabajadores al Servicio del Estado (FSTSE). The FSTSE represented the public sector – telephone operators, utilities, schoolteachers and government bureaucrats. He consolidated the private sector workers into the Confederación de Trabajadores Mexicanos (CTM). These associations, or sectors, constituted the only legal and officially recognized agencies through which various elements of Mexican society could exercise political power.[viii] They fostered a corporate identity through a sense of shared interest among their members, and through a system of appointed leadership that assured that each sector would speak with one voice.

 The Inclusive-Authoritarian State

The process of organizing labor and the campesinos into official organizations allowed the government to address their needs and concerns through a single body. It also gave the government some control over popular dissent by channeling the political activities of Mexican citizens through these official sectors. The president balanced the demands of the different sectors against each other, and against the state development agenda. Membership in the official sectors was mandatory, and a system of local, state and national committees was expected to aggregate and represent the interests of each sector’s constituents.[ix] What this arrangement implied for individual members was that there would be a patronage relationship within the sector itself, as the sector leadership promoted and brokered the interests of the constituents. The pursuit of consensus led to the institution of patronage relationships, personalism, and informal access to power. What was institutionalized at the national level was reproduced within the official sectors and within state and local government.

This array of organizations would change over time, but formed the basic constituencies that would vie for influence on public policy or for a share of the country's wealth over the rest of the century. The military was initially included, but would later depart from the Revolutionary Family, although it would remain under civilian control. Business groups, by contrast, were officially excluded, but would access the government through unofficial organizations such as the National Chamber of Industries (CANACINTRA) and the National Chambers of Commerce (CONCANACO) organized in the mid-1930s.[x]  For the remainder of the twentieth century, the private sector would influence government policy primarily through these organizations. and informally through the boards of parastatal companies and through personal contacts within the bureaucracy. Business would exercise additional influence through informal channels; through positions on the boards of state enterprises; and through its wealth, as private investment was very important to the state’s development agenda.

This arrangement provided the government, the president, and the Party with what one historian called "a consolidated labor backing." Central authority also provided a counterweight to the regional governors, Mexico’s wealthy and influential families and the influence of foreign companies. The fact that laborers were contained within the official sectors also gave the president "enormous control – political and economic," over the Mexican labor force.[xi] The institutionalization of presidential power produced cohesion among elites, who looked upward to the source of authority and advancement in the executive branch. The authority of the president over the official sectors is a phenomenon Mexicans refer to as presidencialismo.[xii] It allows the president to be the final arbiter among diverse interests of the Revolutionary Family, and so instill some discipline and stability in what might otherwise be a discordant or even ungovernable system.

The president was made the supreme authority, but for only six years, and had to step down in favor of his chosen successor. Within the sexenio, the powers of that office were deliberately wide and discretionary, allowing the powers of the presidency to expand with each president’s charisma and force of personality. The Party was committed to preservation of the office at the expense of any individual’s policies, and for decades were secure in the knowledge that the presidential candidates would come from the ranks of the PRI. Jorge Castañeda described the character of the system as:

...neither democratic nor repressive, benignly authoritarian when possible, selectively and sporadically brutal when necessary, sufficiently mobile and accountable to prevent elite divisions and schisms, corrupt and well-entrenched enough to guarantee unparalleled degrees of continuity and complicity.[xiii]

Presidents have wielded their personal authority liberally within the wide parameters of the system. A remark made to the press by President López Portillo in the late 1970s illustrates the president’s own view of his authority. The president had recently fired his Minister of Planning, Carlos Tello because of a dispute within the cabinet. Tello himself sent a letter to the major newspapers, telling them to play down the news. Most of them buried the story. One independent paper, Unomásuno ran it in on the front page.[xiv] When López Portillo was subsequently prodded by the press to explain the firing, he replied that his action was “for the national good.” Asked to elaborate, he said that he was president of a presidential, not a parliamentary, system and did not have to account for his decisions.[xv]

Even authoritarian regimes require some basis for their legitimacy, however, and in Mexico’s case it was a blend of nationalism and revolutionary symbolism joined with what Castañeda called “an uncanny ability to deliver the goods.”[xvi] The model had to be flexible enough to incorporate and neutralize dissent through economic co-optation, conciliation, and when necessary, repression. This flexibility, and the benefits of a prolonged economic boom after World War II was what gave the new regime stability through the remainder of the twentieth century while other Latin countries saw their civilian governments fall to military coups. Mexico is the only Latin American country to avoid a violent change of government since 1920.[xvii]

It was the regime’s adaptability and flexibility in the face of dissent that prompted the famous remark from Peruvian writer Mario Vargas Llosa that Mexico had evolved the “perfect dictatorship.” Vargas Llosa was quoted in Processo magazine in 1990:

The Mexican political system is not democratic – let’s not kid ourselves. It is a unique system that has no equivalents in the world; that has managed to keep a party in power by adapting to circumstances with a versatility that no other authoritarian system has managed.[xviii]

 Open conflict in Mexico was synonymous with violence, and the ultimate objective of the inclusive-authoritarian model was to contain conflict within the system. A corollary objective was to insure the peaceful transition of power between presidential administrations. Once a president left office, he left politics. Mexico would have no “puppet” presidents in office after Lázaro Cárdenas established the presidential succession mechanism. This process of succession, combined with presidentialism and prosperity maintained the low-conflict political environment and policymaking consensus until the collapse of 1982 and subsequent austerity measures strained the financial bonds that held that consensus together.

This explains the conceptual workings of the model, but the concept of reward and punishment in return for loyalty was a complex one, and relied on the government bureaucracy for its implementation. It was an outgrowth of informal access to the government – of a system based on personal rather than institutional loyalties. The heads of the organizations that represented labor, the campesinos and the middle classes – as well as the business community – relied on their relationships with the government bureaucracy to negotiate for benefits and policies in their favor.

This gave Mexican governors and bureaucrats the power to reward and punish according to their position in the government hierarchy, and made the patron-client relationship between society and government reliant upon these administrative actors. Political access to the bureaucracy was the first resort to secure union recognition, licenses, enforcement of a contract between a union and a company, and generally speaking, to access government funds. The bureaucracy perpetuated its role in economic affairs as a way of pursuing its self-interest. In the following section, I will examine how the bureaucracy functioned as an intermediary between the government and the popular groups, and how this produced the unintended consequence of a “rentier” ethos within the government offices.