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DIANE E.

DAVIS

The Politics of Economic Liberalization in Mexico: Explaining the North American Free Trade Agreement

Introduction
In August 1992, the United States, Canada, and Mexico signed a free trade agreement to establish an open marker across the North American conti nent. Of the three signatories, Mexicos support for the pact is perhaps the most surprising. Mexicos ruling Partido Revolucionario Instirucional (PRI), which still formally controls the government and economic policymaking, is a parry that acquired and maintained power over the decades largely through its strong nationalist rhetoric and attendant protec tionist policy stances. Mexico, since the 1910 Revo lution, has vigorously guarded its domestic industry and actively struggled for national autonomy, es pecially vis-a-vis its powerful northern neighbors. For example, it nationalized its oil industry in 1938, imposed strict regulation of the U.S.-based automo bile industry in the I 950s and I 960s, imposed ex tensive restrictions on foreign investment in 1973, and nationalized its banks in 1982. It is not that Mexico has shunned foreign, particularly U.S. cap ital, or that it has rejected all attempts at interna tional integration. The bracero program introduced in the I960s and the maquiladora program devel oped over the 19 0s and 1980s attest to Mexicos 7

interest in economic cooperation with the United States. Nonetheless, Mexican politics and economic policy have always been defined by a strong nation alist orientation and a clear reluctance to fully open its borders to free trade. What, then, explains Mexicos unfettered en thusiasm for the North American Free Trade Agree ment (NAFTA), a policy which is the kingpin of President Carlos Salinas de Gortaris new strategy of large-scale economic liberalization? This ques tion is especially compelling when we consider that in 1980, just a decade ago, Mexicos President Jos Lopez Portillo rejected his nations entry into the General Agreement on Trade and Tariffs (GAIT), deciding to shun even a moderate move towards free market competition, continuing instead with a program of industrial protection. Scarcely two years later; Mexico nationalized its banking system, a pol icy that, in the current drive towards privatization accompanying Salinass support for the NAFTA, would be an anathema. Why the about-face in Mex icos economic policy, the move from strong protec tion to untrammeled liberalization? The literature on peripheral development is replete with theoretically informed arguments that can be marshalled as tentative hypotheses about the

Diane E. Dari is an assistant professor of sociology ar member of the Committee on Historical Studies at the Graduate Faculty of Political snd Si,ciaj Science, Ncri Schcl for Social Research r,i Neu York.

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in Mexico: Trade

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o. unlettered en I tee Trade AgreeInch is the kingpin of c (,orta ris new strategy hcr.ili,.ition? This ques g when we consider that Mexicos President Jos riitions entry into the iIe and Tariffs (GATT), in &r.ite mos e towards nttniiing instead with a ton. Scarcely two ears I banking system, a pol toss ards privatization Ipport for the NAFTA,
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Mexican case. Those employing a world-system per spective, for example, would make much of the fact that a government of the same ruling party that re jected its nations entry into GAYT now supports NAFTA. Suggesting that much of the explanati lies in changing economic conditions over th last decade, rather than in developments within the state itself, this es idence lays a preliminary foundation for analyzing the degree to which changes in the interna tional economy have contributed to Mexicos shift ing support for free trade. Over the last decade, con ditions within the Mexican economy itself also sug gest a need to focus on international economic devel opments. For example, Mexicos 1981 foreign-debt crisissvhich many argue owes to the pressures of foreign hankers andlor the international economic disorder of the I 970sthrew Mexico into serious financial straits, intensifying its current-account im balance and the scarcity of available domestic cap ital for financing economic growth and develop ment. By contributing to structural weaknesses in the national economy that emerged during the 1980s, Mexicos foreign-debt crisis and its atten dant inability to repay external financial obligations do indeed constitute a logical explanation for the current governments support for NAFTA. In fact, that support can be seen as both the political and economic price paid to the United States and inter national lenders for Mexicos financial bailouta Faustian bargain that insures the inflow of much needed foreign exchange and foreign investment to revise the faltering domestic economy, restores Mexicos prestige with U.S. capitalists and among international financial institutions, and reintegrares Mexico into its rightful place in a competitive and free flowing international economy. Yet several factors suggest that structural weaknesses in the Mexican economy, associated with either its foreign-debt crisis or its insufficient integration into the international economy, alone cannot explain the Mexican governments willing ness to fully reverse itself on protectionism and free trade. For one thing, in 1979 and 1980, when it first discussed and then rejected entering GAIT, Mexico

was al o saddled with a relatis ely weak economy and 4 riounting foreign-debt obligations. This is at rcted to by the fact that between 1977 and 1978, after a dramatic peso devaluation, Mexico suffered a severe foreign-exchange crisis, which brought a stabilization policy to Mexico imposed by the Inter national Monetary Fund (IMF). However even as supporters of free trade in Mexico and abroad used this opportunity to push for GAIT entry, Mexicos government heeded the cries of labor and national industry to reject the treaty. Of course, Mexicos foreign-debt obligations and current-account imbal ances were not as severe in 1980 as they ssere after the 1981 debt crisis, when the price of oil plum meted, and President Jos Lopez Portillo found him self presiding over a country oss ing billions in dollardenominated debts to foreign banks. Nonetheless, 0s, owing to policies that had re 7 by the late 19 stricted direct foreign investment and had promoted state borrowing for restructuring the domestic econ omy during the previous presidential administration of Luis Echeverria (1970-1976), Mexicos foreign debt was already a source of concern for interna tional bankers and some capitalists. If structural weaknesses in the Mexican economy were present in 1979, and if foreign debt was even then seen as a problem, we might want to reconsider whether, and how, domestic factors also help account for the remarkable policy shift on protection and free trade os er the last decade. In what wa, exactly did changing domes tic conditions matter; and could the origins still be traceable to international economic conditions? Scholars who seek explanations for development policy in the actions of the developmental state might begin to answer with a focus on the Mexi can government and its relationship to capital, ei ther foreign or domestic, as well as its overall poli 2 To the extent that the Mexi cymaking autonomy. states can autonomy or relationship to capital has changed dramatically in the past decade, so too would its position on free trade. Domestic capitalists and nationalist politicians who have long favored protection, for example, might hase been economi calls weakened by the debt crisis, such that foreign

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cn one of the positions RD in order to repudi lion and capture politi urban and rural poor, this politically unpopu If anything, with vocal d opposition mosements he first time in decades, g standards much lower GAIT was shunned, one een less willing to po on now than in the past. cssures, managerial req of international integra g frce trade makes good nade it politically possi irces and conditions that on of free-trade policies oducing the same policy

vs to answer these ques he personal relationships de Gortari, his cadre of technocrats, and a new sts involved in financial emergent sectors of the however, is locus less on and more on the chang f Mexican politics. Our last decade Mexico has restructuring in its in. a restructuring that has linas from the demands is within the ruling parry, callv linked him anew to in and outside the PRI a de. rient, we do not ignore ions, either domestic or .ing economic power of it the impact of a chang. lam changes in class for. .rtain classes is mediated titutions, and practices. nt about the current gov

crnments support for the NAFTA, we present a pic ture of the Mexican state under Salinas as guided as much by domestic political objectivesmost of which are not easily reducible to class or economic concernsas by a managerial concern with cto nomic solvency or an incapacity to repudiate the demands of free-trade capitalists. In making these claims about Salinas and the NAI-TA, in short, we not only take seriously domestic politics, we also ar gue that Mexicos move towards free trade tells us as much about the institutional transformation of do mestic politics as it does about classes, class power, or international economic integration in contempo rary Mexico. Xc begin with a brief overview of Mexicos political and economic history until the late 1970s and how historical deelopmcnts led to a debate over free trade both in 1980 and 1990. Then, we examine changes in the balance of political power between 1980 and 1990 that help account for these varied outcomes. The political changes that have oc curred in the PRIs three-tiered organizational struc ture of incorporation over the last decade are ex amined first. We focus specifically on the chang ing power and political practices of labor, peasants, and middle classes as well as on their specific re lationship to the Salinas administration .Next we examine the changing structure of organizational representation for capitalists, the composition and relative power of each patrimonial body over the past decade or so, and the changing relationships of those bodies to each other and to the .\lexican state. Last we focus on the regional distribution of po litical power, especially the changing relationships between central regions, chiefly Mexico Cit. and northern states. With respect to each set of class or regional forces, our objective is to assess political changes in each groups capacity to push the Mexi can state to carry forward its desired position on free trade. The paper concludes with an overview of the political transformations Mexico has experienced in the last decade, and what further political changes might be expected with the NAFTA in place.

The Political Structures of Ronomic Nationalism: 1930-1970


Mexicos ruling parry cemented its hold on polit ical power in the aftermath of the 1910 Revolu tion through the formation of an incorporated po litical system. Institutionalized during the I 930s and I 940s, corporatism was structuredin both party and national politicsaround national feder ations representing labor (CTM), peasants (CNC. and popular middle classes (CNOP). For decades, both the PRI leadership and government officials emerged from and coordinated the institutionalized participation of this broad spectrum of the nations citizenry, a procedure that politically linked these three sets of classes to each other and to the state. Mexicos corporatist political system was unique to the extent that it included not just industrial labor, but also campesinos (peasants) and middle classes. In addition, starting in the mid-1930s shen labor and peasant sectors of the party were institu tionalized, businessmen in Mexico were uridicallv mandated to organize in national business federa tions. While the parr)s labor sector became a vehi cle for the political participation and control o in 3 businessmens organizations (es dustrial workers, pecially the CANACINTRA, which represented in dustrialists in !slexico City) became the principal mechanisms for public.private sector negotiations 4 Both formal and informal discus and lobbying. sions about macroeconomic policy were generall carried on by these labor and industrial organiza tions, and the results were channeled directly to the government bureaucracy and through the party. This highly inclusive variant of corporatism brought Mexico more political stability than almost any other country in Latin America. At the same time, it heralded Mexicos moe towards industri alization through import-substitution (ISI), an em phasis on producing goods domestically rather than importing them. Corporatism was conducive to ISI mainly because it established an institutional and political network to neutralize tensions that might

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arise between the different classes as the country em barked on a new course of urbanization-led indus trial deelopment starting in the 1940s and 1950s. Central to both political stability and indu trial prosperity was the partys labor sector (CT\i). During W\XIl, when the United States was preoc cupied with Europe, Mexicos ruling party used its newly formed institutional relationships with labor to forge a solidarity pact with national capital. La bor remained loyal to industry and the state as long as wages and social policies remained favorable, while national industry agreed to support relatively progressi\e social and wage policies as long as labor unrest remained at a minimum and government sub sidies for industrial deselopmcnt continued. To the extent that this tripartite political alliance between capital, labor, and the state brought several decades of industrial development and economic prosper irv, it further buttressed the PRIs hold on political power and institutionalized the ideological contours of Mexicos class-based corporatism. It also gave the partys labor sector unparalleled power in the for mulation of economic policy, and tended to push both peasant and middle-class sectors to a secondary position in national polic making, at least in terms of national political rhetoric. With the corporatist inspired capital-laborstate pact serving as the central axis of Mexicos po litical stability and industrial development, Mexico pursued a strategy of 151 that favored manufacture of consumer durables and non-durables. Consumergoods production was labor intensive, so the coun trys politically strategic working classes were gain fully employed; and because it was also geared to wards development of domestic items like processed food, clothing, and household goods, both working and middle-class consumption of these commodi ties fueled the employment and production process. Although land-tenure patterns brought rural unem ployment and a steady stream of rural-urban mi grants, this was not a serious problem until the 1960s and 1970s. Before then, peasant agricultural production of affordable (and subsidized) foodstuffs for the urban work force maintained urbanization Ted industrialization as the strategy of choice. For

dec?oes then, Mexicos three-tiered, class-based cor poratist system, with labor at the lead, smoothly ac commodated the nations production and consump tion priorities. This system remains intacteven as for eign capital increasingly entered Mexico during the 1960s and 1970s and as certain sectors of the economy became more internationally integrated because the capital-labor-state pact had embed ded itself as much in well-institutionalized politi cal structures of incorporation as in the 151 devel opment strategy. That is, political and economic structures and practices in Mexico reinforced each other. Hence, the symbiotic relationships between IS! and corporatism first established in the I 930s and 1940s, with labor and national capital in the lead, lasted longer than in many other Latin Ameri can countries. By the late 1970s, in fact, Mexico still boasted one-party, corporarist rule, even as other Latin American countries were experiencing pre liminary moves tovards democratization; and the nation was still mired in the IS! strategy despite general recognition that this approach was ex hausted and greater international economic inte gration might bring new economic benefits to the nation. During the political administration of Pres ident Gustavo Diaz Ordaz (1964-1970), efforts were made to move Mexico away from the statesubsidized production of consumer durables and towards capital-goods production using foreign in vestors and private banks as financial mediators. 5 This strategy, knossn as Stabilizing Development, was the closest Mexico had yet come to the intro duction of a neoclassical development strategy, be cause it called for greater direct foreign investment, linked the peso to the dollar, assumed relatively open borders, and limited government involvement in fi nancing development. Stabilizing Development was strongly supported by businessmen linked to for eign capital, especially northern businessmen and other industrialists with the most to gain from pesodollar transactions, as well as by Mexicos increas ingly powerful Asociacin de Banqueros Mexicanos (ABM).

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icred, cIass-haed cor the lead, smoothis ac .iiiu ion and consump
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i.itionally integrated ate pact had embed nst itutiona lized politi nil as in the IS! devel ulitical and economic IesiC() reinforced each iel.itionships between 30s 9 i.ihlished in the 1 national capital in the .i ny other Latin AmenOs, in fact, Mexico still i st ride, even as other rrc experiencing pre mocratization and the he ISI strategy despite approach was ex i.itional economic inte (fliiiflic benefits to the
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t also met con Yet Stabilizing Developmen NACINTRA and siderable opposition from the CA producers involvcd other orga nizations of domestic the domestic mket, in IS! manufacturing for favor international mainly because it appeared to c industrialists and capital and hankers over domesti ssure on wages pre because it placed doss nward that th eatened ts (via inflation), two developmen vious decades. pre the the capital-labor-state pact of azc admin Ord Diaz ing Complicating matters, dur t emerged emen mos rm refo istration, a democratic mainly to the coun within the party which catered were increas:ngly ex trys middle-class sectors, who tions about develop cluded from substantis e negotia leadership. capital, ment between the partys labor erent forces within and the state. Albeit led by diff at reform ere rela sexican politics, both efforts Diaz Ordaz ended tively short-lived, and President ion from na::onal in his term with growing opposit le classes, whose dustrv. laborers, and thwarted midd their support lent spokesmen within the ruling parry Echeverria. to Luis 6

assa
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(1164-1970), efforts from the state

tier durables and

lift null using foreign in

mediators. financial 5 a hilii ing Development, d vet come to the intro cli P St ratcgv, he I rr t foreign investment, issiinird relatively open nc-ni involvement in fi Ii iiii. I )cs Llopnicnt ssas iilissiiitn linked to for i fun Iiisiircsstncn and or ill gain from pesoas by sIrxicos increas Ic l.i u(uicros ble xicanos
is

sought to strengthen policy reforms geared cal structure by introducing classes. In doing so. le towards peasants and midd important groups ir ral he not only alienated seve agricultural exporters. the private sector, especially ducers linked to for bankers, and capital-goods pro Mexicos fiscal cris:s eign firms, he also deepened to finance the Shared through foreign borrowing the end of his tetm, Mex Development strategy. By aluation, the threat of ico ss,us faced with a peso dev plan, and uneasiness an IMF-imposed stabilization r alike. on the part of capital and labo President Jose In the late 1970s, as Mexicos the 196 from s the piece Lopez Portillo picked up ng the Taki . ads ssro at a cro crisis, Mexico appeared kers han y man el, mod IMF st.ihilization plan as a n ope clear a for ed and exporting capitalists push s rier har of ion inat elim ing of the domestic market, stare drastic reduction in to foreign investment, and t. The intent was to re men involvement in develop exchange and revive the capture necessary foreign 5 several of the PRI stalled domestic economy. Yet cialR espe approach, corporatist bases opposed this ed to ally polin tend still h whic organized labor, : h o(the controversy Reviving Nationalist Rhetoric call with domestic capital. Muc on of the economy re over this proposed liberalizati 1970-1980 the GATT. Starting in volved around discussion of Jnstituto Niexicano mid-1979, the director of the coali al itic pol ist pul po d for new pol: old calle E( Under Echeverria, de Comercio Exterior (IMC pursued xico Me . force full strongly in op st with Mo e. tions emerged again cies to promote external trad elopment, Dev ed Shar spokesmen egy, and strat t A TR men CIN a new develop position were the CANA dicated the vin ally Mexicos ion itut that inst ed and claim y which politicall le industry, who texti the for ion tect pro ng ewi ren , if not would he irreparably harmed old capital-labor-state pact by own industries tn role es stat the pening t lace a seri of domestic industry, b dee ed, and that the country migh inat elim ct dire g itin lim by ), lais were to join GATT Union production lthrough parasla ous recession if Mexico ben e wag cing odu intr r argued that a herte foreign investment, and by kesmen for industrial labo spo r. labo s ard tow ed gear omy, and not GA11. efits and democratic reforms restructuring of the local econ g, akin spe ctly stri teg stra domestic and loreigr This as not the old 151 would solve the nations s and clas same the less or alliance between labor hut it did cater to more exchange prohlems.S This pri ic nom eco the on, reas of economic decline political bases. For this and national capital in the face wel lly ecia esp sere t men elop ralization was further orities of Shared Dev and against free-market libe nted rese rep h whic A, TR CIN the CANACINTRA comed by the CANA sealed in early September, when le of com pab inca s firm ed -siz ed ium uid renegotiation of smaller. and med publicly called for a state-g rers, who labo by and s, firm gn peting against forei
ARY ORLD BUSINESS & THE CONTEMPOR

aining posser with do ciii found their greatest barg capital. Echeverria aIs mestic, not international, the entire corporatist pout:

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industrial salaries, so that fledgling domestic capi talists ssould not he forced into confrontation ss ith the labor sector. During this time, President Lopez Portillo was cautious about his stance, arguing in his ariual state-of-the-nation address for the modernization of Mexicos economy along patriotic, not explicitly nationalist, hnes. 9 Pro-GATT forces read the presi dents position as undecided and pulled out all stops. Spokesmen argued that consumers would benefit from GATF entry, since quality control would rise and prices would equalize. Business would pros per and bureaucratic corruption would also decline, they argued, because import and tariff paperwork would be practically eliminated. As pro-GATT forces continued their efforts throughout the fall, positions began to clarify, al though opinion remained highly divided. By late 1979, a variety of groups of workers active in the party, several peasant organizations worried about the possible entry of foreign agrihusinesses, and national industry as represented b the CANAC INTRA argued against )oining GATE Surpris ingly, they were halfheartedly supported by sev eral spokesmen from the right-wing PAN, which was strongest in northern regions bound to be most transformed by integration with the United States. Firmly behind the plan were the CO PARMEX, a national federation of mainly northern entrepreneurs with sights on the export market, the CONCANACO, or National Federation of Cham bers of Commerce, and several other smaller busi nessmens organizations (ConfederaciOn Patronal del DF, Club de Exportadores de Mexico). In time, the CONCAMIN, a national federation of large in dustrialists already strongly linked to foreign capi tal, also lent support. Perched on middle ground in the debate was the Congreso de Trahajo, a delib erative body of unions drawn from the labor and popular middle-class sectors (CNOP), which first opposed but later gave its lukewarm support for entering GAIT. In the context of this divided opinion, the sheer number of organizations and weight of eco nomic power lay on the side of the GATTs sup-

ports. But in March 1980, President LOpez Por rio made public his opposition to entering GAIT, arguing for Mexicos self-determination, a stance that brought public accolades from longstanding GATT opponents like the CANACINTRA as vell as temporary converts, like the president of the Mex ican stock market and the leader of the nations oil union, among others. Liberalization measures are not enough, President LOpez Portillo argued, to promote a more just economic order. Rather, the government would try to address Mexicos domes tic problems h, among other reforms, restructuring the economy, limiting subsidies, and by developing a more comprehensi. e agricultural programso food could he consumed and exported rather than im ported. The foundation for this new development strategy introduced by LOpez Portillo was the na tions newly discovered oil reserves, which were to provide sufficient foreign exchange to balance the nations current accounts and generate additional dollars for debt repayment and revenues for domes tic programs. In proposing this alternative to GAIT entry, LOpez Portillo made clear three key issues: the state was not going to reduce its involvement in directing the national economy, it was not going to abandon its support for national industry, and, for the good of the nation, it was going to renew its alliance with labor. 2 Speaking to oil workers in March LOpez Portillo highlighted his allegiance to labor by christening Mexicos workers the nations respon sible class, and reiterating his expectation that the organized-workers movement would bring the so lution to [Mexicosl problems by augmenting pro ductivits, which would bring more consumption and 3 more sales, and in turn combat inflation.i Although they captured both domestic and international attention, LOpez Porrillos opposition to the GAIT and the Mexican governments strong support for the nationalist-oriented, capital-laborstate coalition were relatively short-lived. In 1987, under President Miguel de Ia Madrid. the Mexican government reversed itself and entered the GAIT. In 1988, moreover, with President Carlos Salinas de Gortari at the helm, the nation embarked on a mas

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President Lpez Por to entering GATT. determination, a stance lades from longstanding ZANACINTRA as well as he president of the Mex leader of the nations oil herali7ation measures are ipez Portillo argued, to mic order. Rather, the iddress Mexicos domes icr reforms, restructuring dies, and by de eloping a iltural programso food xported rather than im r this new development pci Portillo was the na reserves, which were to xchange to balance the and generate additional and revenues for domes
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sive course of privatization, selling parastatals and reducing subsidies to domestic industries. By Octo ber 1990, Mexico announced to the world its pl.s to establish a free-trade agreement with the 1 t ?iited States and Canada. What had happened? For one thing, Lopez Portillos development strategy collapsed when the price of oil dropped dramatically in 1981, leaving Mexico with a seri ous foreign-debt crisis. But that was not enough to bring a reversal in policy. Why did it take until 1987 for Mexico to enter GAIT; and until 1990 for un restricted free trade to he placed on the agenda? The timing of these events suggests that the impact of the foreign-debt crisis on the decision to join the NAFTA was at best indirect. So what were the prox imate factors that shifted the policy terrain?

The Disintegration of Corporatist Politics


Basically, the period from 1980 to 1990 witnessed a fundamental transformation in the structure of power within the PR! which, among other things, reduced labors say in national policymaking. In the 1980 struggle over the GATT, labor was still consid ered perhaps the most powerful, albeit corporatist controlled, voice s ithin the part. Labor-sector constituents were critical to the partys electoral victories and its legitimate claim on power, and they comprised a powerful bloc within the PRI controlled Congress. Despite the presence of in dependent unions rejecting the partys labor-sector leadership and the PRIs electoral hold on power, the labor sector was still influential during the pe riod when the GAIT was first discussed. This was evidenced, for example, in the 1979 Manifiesto a Ia Nacin, registered in Congress by its labor dele gates, which heralded labors centrality in national policymaking and which in many ways highlighted the policy reforms that LOpez Portillo eventually 14 would introduce in 1980 upon rejecting the GATT. And even for several years after the 1981 debt cri sis, labor continued its privileged claim on party

ernative to GATT entry, hree key issues: the state involvement in directing as not going to abandon iustrv, and, for the good ig to renew its alliance oil workers in March his allegiance to labor by ers the nations respon his expectation that the ient would bring the so ms by augmenting pro g more consumption and 3 ihat inflation.i red both domestic and pci Portillos opposition can governments strong -oriented, capital-labor. clv short-lived. In I 98. Ia Madrid, the Mexican and entered the GAIT. esident Carlos Salinas de ion embarked on a mas

ritics. This was sceti particularly through the in troduction in 1985 of a new solidarity pact between labor and the state, which granted labor wage and other cost-of-living benefits denied other sectors, so that labor unrest would remain minimal, thus con ducing to economic recovery. But by 1987 and 1988, these political struc tures and practices had changed dramatically, and this made all the difference. It was not that labor now supported NAFTA: its opposition was perhaps even stronger than it had been against the GAIT in 1980. The TNls labor leader Fidel Velzquez, in fact, publicly decried the impending unemplov ment, bankruptcies for national industry, and accel erating inequalities that were expected with a freetrade agreement. He even called for imposing new restrictions on exports and for Mexico to remote itself from the GATT emphasis mine], which was then considered by many to he a somewhat palat able version of free trade. iS That Salinas was willing and able to push NAFTA forward, then, owes not to any softened position by the partys labor sec tor, or to any transformation in its alliance with the CANACINTRA or other nationalist businessmen. Rather, one key difference was that organized labor had lost much of its power and legitimacy within the parry itself, and this in turn made Salinas less heedful of labors demands. By 1988 and 1989, for example, organized la bors capacity to call strikes and to guarantee wage increases a ppeared almost completely squelched. Also, the government was routinely repudiating la bors strike actions and failing to negotiate with la bor leadership when strikes did occur. Last, the ad ministration had dropped its earlier stance of sup porting labors wage and workplace demands in most juridical negotiations, something which soon brought a drop in real wages to pre-1980 levels. Or ganized labor, in short, clearl lost power and voice within the PRI and its strong opposition to economic liberalization and free trade became a victim of this change. How did this happen? Two substanrie changes that peaked during the 1980s led to orga nized labors dramatic political demise within gov

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ernmental policymaking: the declining poser of the labor sector s thin the PRI; and the declining power of the PRI leadership, as a whole, to influence te state bureaucracy. These changes owed to trar.sior mations in the composition of the industriai work ing class as well as to new dynamics within the stare and the party itself, both of which s ere the cumulatise effect of long-term trends starting in the late 1960s that reached a critical stage after 1982 with the debt crisis. After close to lorry years of success founded on the revolutuonar rhetoric of working-class solidau iv, the union mm ement was, by the early 1980s, showing irreparable political di visions. Many of the rank-and-file, upset v ith the cac17uns?no of Fidel Vt-l,izquez and the labor lead ership, were pushing for democratic changes within the mosement and the party. Of course, independent unionism was not new to Mexico, it had appeared frequently since the 1940s, and became highly ac tive in the late 1960s and earls l9Os. But by the mid-1980s, after many failures to push the parry leadership away from its hierarchical control of la bor, dissent from the rank-and-file hit a new high. Hence divisions within the labor movement reduced its bargaining power with gosernmenr polucymak ers. Dissension and division within the union movement were exacerbated b several other de velopments. One, the post-I 981 economic crisis, produced an inflation rate of 57 percent by late 1982 and a 39 percent reduction in real wages by 1983 Complicating matters was the fact that formal-sector employment was on the decline and informal-sector employment on the rise. This de pleted the ranks of the organized labor mosement and pushed many of Mexicos citizens to concern themselves more with conditions of daily survi al and reproduction (housing, health, transport, water, elecrricit than salaries or workplace demands) The growth of the informal sector, like the move for democratization within the organized la bor movement, clearly was not an entirel new phe nomenon in the 1 80s. But again, the 1982 eco 9 nomic crisis heightened this longstanding tendency to the point where the formal sector became less

cdnsequcntial in numbers and eventually in poli tics than the informal sector. The power of orga. nized labor slowly began to diminish accordingly. This may be best evidenced in the increasing ten dency for industrial workers (especially in Mexico City, were the majority resided) to lend their alle giance to neighborhood-based urban social move ments more than to the partys labor sector. By the mid- and late 1980s, in fact, the most vocal and ac tive of Mexicos industrial laborers worked through or with local neighborhood movements; and it be came common to see families and neighbors from allied community-based movements joining factory workers on strike to protest the inability of both the government and the parry leadership to meet their demands. The emergence of an active network of neighborhood-based social movements, in itself, also helped alter the dynamics within the PRI dominated corporarust political system, another fac tor which further diminished the power of the la bor sector within the parry. By the late 1970s, for example, the strategy of urbanization-led industri alization started to produce a near urban disaster in Mexico Cir principal home to most national industn and labor. As the city grew tumultuously through the siting of industry and through steady rural-urban migration of peasants seeking to reap the benefits of industrial employment, the citys ser vices and environment deteriorated rapidly. Becausr the partvs capital-labor-state pact insured that em ployment and industrial-development objectives re mained priorities, the party had been either unwill ing or incapable of putting urban-service concerns at the forefront of policy, except to the extent that by doing so it helped with reproduction of the in dustrial labor force through providing housing) or accumulation (real estate). These social movements had important impli cations for the PRI itself. Over time, large portions of Mexicos citizenry not active in the labor sector. particularly those urban popular and middle classes formally represented by the parrys CNOP (like state workers, professors, street vendors, doctors, small shopkeepers, schoolteachers, raxistas), became in-

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id eventually in poli nir. The power of orga iii diminish accordingly. in the increasing ten .ers (especially in Mexico sided) to lend their alle ased urban social move artys labor sector. B the cr, the most vocal and ac lal)Orers worked through d movements; and it he i,lies and neighbors from u cments joining factory t the inability of both the leadership to meet their an active network of
il movements, in itself,

1amics within the PRI neal system, another fac hed the power of the Ia v. By the late 19?Os, for jrhanization-led industri cc a near urban disaster home to most national city grew tumultuously stry and through steady peasants seeking to reap nplovment, the citys ser riorated rapidly. Because ire pact insured that em velopmenr objectives re v had been either unwill urban-service concerns cxcept to the extent that reproduction of the in ch providing housing) or nts had important 1mpher time, large portions icrive in the labor sector, ipular and middle classes partys CNOP (like state vendors, doctors, small rs, taxistas), became in-

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creasinglv alienated from the PR!. This had two ef fects. First, it pushed many of these groups to join urban social movements, often territorially hase,i, which replaced the parr as the main mechanis-ji for pressing demands about critical services. Second, as large numbers of the CNOPs formal constituents physically or emotionally abandoned the part, the latter became increasingly exclusive in its structures of political representation. This left only an increas inglv declining number of industrial laborers carry ing the parrys rhetorical banners. Again, the disenfranchisement of many of Mexicos popular and middle classes began in the 1970s. But when the economic crisis occurred a decade later the governmentthrough wage in creases and the solidarity pact that kept industrial salaries level while salaries for others steadily eroded through inflationat first seemed to respond only to the demands of the CTM and organized labor. The partys initial preference for labors concerns, para doxicall made those outside the organized labor sector feel even more alienated from the parry, v hich weakened the parry as a whole and thus diminished the national policymaking power of its labor sector. These changes peaked in the 1988 election, when ex-CNOPista Cuauhtemoc Crdenas left the party and ran as an opposition candidate against the PRIs Carlos Salinas. Crdenas shocked the parr and the nation by carrying Mexico City in the presidential elections, mainly with the support of the citys ur ban movements, mans of its popular and middle classes, and several dissident labor unions. As it be came clear to Salinas and others that the popular and middle classes were abandoning the party in droves, and that the unity of the labor sector was in danger of collapse, the political repercussions be came clear. Without their broad base of legitimacy with popular and middle classes as well as with la bor, old-guard party leaders could not dominate as they had before; and with the labor sector itself di vided and weakened, those specific demands that in the past had defined the partys economic policy, like opposition to free trade, were even less likely to be heeded. After the 1988 elections, the PRIs internal

fucture continued to transform itself in such a wa as to challenge the old ways of doing politics, and therefore to give President Salinas more scope to push the NAI-TA. This was clear in early 1989 when Salinas and his poh:cal allies announced the elimi nation of the CNOP and its replacement by a new organization, UNE. Ciudadanos en Movimiento. UNE was to include not only old constituents of the CNOP, but also urban movements, territorial movements, so-cal]ed citizens movements, and all manner of unions that wished to join. By defining itself in this way, UNE effectively broke the insti tutional power of the labor sector and the party as a whole. This was accomplished by drawing dissi dent groupswhose location in the corporatist po litical system previously had been defined by class, or workplace, idenr.riesur of the CTM, and giv ing them institutional incentives to politically par ticipate in a new corporate body now defined on the basis of non-class, social and collective identities. At about the same time President Salinas introduced a new poverty-alleviation program, Solidaridad, fur 8 ther emasculating the party and its labor sector. Solidaridad was ru. directly out of President Sali nass office, thereh hpassing old party leaders and corporatist structures; and it was used to develop new patron-client networks with populations that could solidify the presidents autonomy from the parrys old corporar.st sectors. The upshot as that by late 1989 and early 1990, the capacir of the party itself to influence national policvmak:rig had diminished, and, within the party, labor had suffered the most serious fall. Moreover, while this was occurring President Salinas was effectively distancing himself from the party and its corporatist sectors, and establishing new link ages with citizens arid populations that could lend him some popular legitimacy even as he pushed for greater liheralizatior. of the economy.

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The Demise of the Revolutionary Capitalists and the Transformation of Mexicos Business Sector
Political changes within the corporatist political sys tem may have diminished labors voice in determin ing economic policymaking, hut that was probably not enough to turn the goernrncnt around on free trade and liberalization. Labor in Mexico has never been the only voice in economic policymaking as noted earlier, strategies of industrial development in Mexico had been structured around the negotiated interests of those invols ed in a capital-labor-state alliance. Accordingly, to understand Mexicos new political field in the 1990s it is helpful to identify dramatic changes over the last decade in the polit ical poser of those national capitalists who joined with labor to oppose free trade, both in 1980 and 1990. The evidence from the initial struggle over the GATT in 1980 suggests that the CANACINTRA was the strongest and most powerful voice against free trade. hv was this organization, which rep resented small- and medium-sized industrialists, un successful in 1990? Again, sheer numbers tell little of the story, since, as of 1992, small- and medium-sized industrialists still constituted 90 percent of Mexicos industrial sector. 9 But the economic deterioration in the 1980s of small- and medium-sized industri alists and the overall restructuring of the Mexican economy provide part of the answer. Mexicos industrialists, especially those orig inal IS! industrialists of smaller size grouped in the CANACINTRA, long held political power in parry policymaking owing to the historical pacts forged in the 1 940s. Many of those represented b> the CANACZNTRA, or politically linked to its lead. ership, were what Nora Hamilton calls, Mexicos revolutionary capitalists. These fiercely nation alist industrialists earned access to party leaders through personal networks, often in exchange for their strong support for nationalist policies and the rights of labor. Throughout the 1940s and 1950s, the CANACINTRAs capacity to negotiate with the

kl was unmatched by other business lobbies, many of whomlike those representing the private sec tor in norther regionsshunned the parry and poli tics altogether. During the 1960s and 1970s, more over, even though its economic prominence declined, CANACINTRA still had a strong voice politically, as did other business lobbies, like the CONCAMIN (large industrialists), CONCANACO (commerce), and ABM (bankers). By the late 1980s, however, 2 the structure of power within and between these dif ferent business lobbies had changed, such that na tionalist industrialists represented by the CANAC INTR..A were almost fully banished from the inner circles of political power. Much of this has to do with the diminishing importance of the labor sector in the parry, as noted above. But it also has to do with the 1981 debt crisis and the 1982 bank nationalization, both of which, ironically, can be traced to the governments efforts to protect domestic industry. For example, when Lopez Porrillo supported a development pro gram dependent upon oil revenues rather than one based on joining the GAIT, the consequence was that when oil prices dropped the economy plunged headlong into economic crisis. That crisis brought accelerating inflation and a faltering domestic econ omv, which hit small- and medium-sized industrial firms first and hardest. Starting in 198S, and con tinuing throughout the decade, thousands of small firms went bankrupt, not only because domestic de mand was squelched by rising inflation, hut also because domestic credit was scarce. When Mex ico finally joined the GATT in 1987, this signalled the death knell for many of these small firms, who saw their few remaining protections now eliminated. Further weakening the position of CANACINTRAs members was the dramatic decline in government spending, which accompanied the stabilization poli cies introduced in the aftermath of the crisis. Smalland medium-sized firms had long been providers of goods and services to the public sector, and they suffered from the drop in government spending. While in 1980, public-sector payments to small and medium industries were valued at 473.6 million pe 2 sos, ifl 1991 they amounted to only 282.6 million.

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:r business lobbies, many csenting the private sec nned the party and poli 1960s and 1970s, moremc prominence declined, strong voice politically, s, like the CONCAMIN CANACO (commerce), the late I 980s, however, in and between these dif changed, such that na cented by the CANAC anished from the inner
do with the diminishing or in the party, as noted do with the 1981 debt ationalization, both of ced to the governments industry. For example, rted a development pro evenues rather than one r, the consequence was d the economy plunged sis. That crisis brought faltering domestic econ nedium-sized industrial -ring in 1985, and conide, thousands of small iv because domestic de sing inflation, but also as scarce. Xhen Mex in 1987, this signalled these small firms, who ections now eliminated. ion of 5 CANACJNTRA decline in government d the stabilization poli ath of the crisis. Smalllong been providers of public sector, and they government spending. payments to small and ied at 473.6 million pe . 1 million to only 282.6 2
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the NAFTA plain 1ie relaticely easy move towards se-d by The 1982 hank nationalization impo thing, with the h Salinas in 1991 and 1992. For one office that ng leavi re befo illo Port z lpe t iden and that of the Pres growth of nonbank financial services an effort In ers. matt ted plica com er furth year s started same stock market, many of Mexicos capitalist l a .to rs of secto to stem capital flight, establish enough fisca ctive to make their fortunes in nonprodu e and s-ccial er pow the omy to direct investments in agricultur ed the economy. This not only diminish ioratir po ies, lobb ial programs, and stabilize the rapidly deter merc com of longstanding industrial and of the 1981 and the sition of domestic industry in the face like the CONCAMIN, the CONCANACO, of Mevicos ers, it 6 lead 2 t crisis, Lopez Portillo nationalized many extan CCE, by delegitimizing their ly transfMm polit out with key banking institutions. Yet by total s alist capit also brought a ness cadre of se. eral older these ing the financial sector and by alienating of any to s iance ical or institutional alleg rncasce ul n to bega ly key businessmens organizations, this slow s alist capit new organizations. The NTRA and, lob for orks timately hurt groups like the CANACI netw and ions nizat form their own orga the inrnal more important perhaps, transformed nt. bying the governme lohb es in rcpri balance of power among existing business This transformation was aided by the XS N.TR ACI CAN the to led er furth h ma whic a of Mexico, vatization of the banks and the initiation ise. rred dem occu h ical polit jor privatization program, both of whic aoca For example, concentration of credit 2-1988). under President de Miguel Ia Madrid (198 bank ria:ion the after k shran than r rathe sector in te grew tion Once the banks were resold to the priva cre for l sectors rion, a decelopment that eliminated stria aliza2 2 indu 1985 and 1986, the banking and their own since ted, entra smaller industrialists without access to conc became even leaner and more 198s. in ent solv then were private financial institutions. Over the ers only a few of the original own mercial E-ank like es Nam s. ion fact, Mexico maintained a rate of com 7 itut inst enough to recapture their 2 s higher than ing concentration almost seven time Garia Sada, Bailleres, sias, Ygle nosa Espi , retta Lego n, than Japa the United States, three times higher had been associated past and Ahedrop, which in the Canada. An and one-and-a-half times higher than solidified their eco ies, lobb with the major business of the bank additional unanticipated consequence so, at the expense nally perso nomic position, but money from nationalization, as capitalists removed asingly left by the incre lists stria of other fellow indu anisms fo ac names entered new banks and invested in other mech ely . entir l side seera wav c 2 Also, er and mark stock the in boom a was ally powerful, cumulation. the ranks of Mexicos most economic I9 80s the over t, shor In tor. sec 24 ice ser flnancialincluding the brothers Caedo White. cult to se-cure ed, new smaller industrialists found it diffi In the organizational shuffle that ensu pr.vate the ic or publ the r eithe from al formed, capit ps or credit coalitions of partners and industrial grou their ecoromic ned haste h whic tion niodus situa l a iona rs, secto which made obsolete the past organizat deman.. and which and , state decline in the face of reduced domestic operandi vis-a-vis the party and with ions nizat orga greater foreign competition. highlighted in relief several new arterdant i polit and , The bank nationalization and the rives obec totally different nencorks, ank fin.artcial y icall polit and l entry of former bankers into nonb voca y cal priorities. Two especiall activiries not only hurt smaller domestic dus S 2 anew on the salient organizations that appeared sition to the ties in For Enti ness tries that formed the backbone of oppo Busi of scene, the Coordinator 1990, the also ion of in nizat orga GATE in 1980 and the NAFTA in an , SAS eign Trade, and the C1E econoni-.. the debate the ed enter transformed the structure of Mexicos soon s, orter dustrial and agro-exp up gro l stria indu r majo ns natio the CANAC composition of the strongly in favor of the NAFTA. With lob iona nizat orga their of ip bersh other previ ings, the mem JNTRA effectively emasculated, and -sms oth vis-a ies lobb in certa of er pow nal conflict, bies, and the ously powerful business lobbies in inter cxher also er pow ical polit in ges chan ers. These
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flux, or out of the picture, these new entrants were able to forcefully push Salinas forward on a coher ent free-trade position, with relatively little effecte opposition.

Replaying Revolutionary Battles: Center vs. Region in National Politics


One last aspect of the political terrain in Mexico that changed fundamentally over the I9SOs, and that helps explain why old opponents to the NAFTA were not nearly as influential as the new cadre of t business lobbies in influencing Mexicos Presiden ical polit of Salinas, was the new regional balance power. For decades, Mexicos politics and economy centered on Mexico City, where the government bu reaucracy lived and where the majority of laborers and ISI capitalists resided. The consolidation ot oneparty rule, in fact, was intricately tied to political geography. Until the Revolutionary leadership could eliminate or control regional challenges, its hold on s the state was not assured. hen those challenge Cityo .4exic the gh throu part were met, in large based pact between capital and labor in the 1940s, , the ruling party triumphed. Over the decades, then processes of geographically based political and eco nomic centralization reinforced each other. As Mex icos economy grew through urbanization-led in g dustrialization, citizens lo ally supported the rulin party. But as urbanization-led industrialization brought chaos and produced one of the worlds largest and most unmanageable cities, urban social movements during the 1970s and 1980s increas ingly challenged the PRI and politics as usual, and the partys hold on national politics began to slip. When the labor-national capital pact began to dis integrate in the I 980s, due to the economic crisis and other related factors, the PR! found itself facing a dilemma. Should it continue to pour its resources and energy into the capital city in an effort to boost

Cir. pop S1 industrialization and/or keep Mexico to other turn it ld shou or ulations politically loyal, offer might , vated culti if regions and activities that, g Startin ort? supp ical polit of an alternative source l t Migue iden Pres crisis, omic econ in 1982, after the by issue this on stand l forcefu a de Ia Madrid took on, introducing a massive program of decentralizati al which included changing the structure of politic fos to decision making and development financing regions. One ter the involvement and autonomy of 29 nations of de Ia Madrids goals was to strengthen the ed achiev be d fiscal solvency, an objective he felt coul center, the of out if financing decisions were moved where union pressures, business lobbies, and cor s rupt bureaucratic practices prevailed, to the region start to was move the of s. But the effect 0 themselve 3 uraging a process of repoliticizing regions, by enco affairs. state and ions elect more involvement in local the over ico, Mex ns, actio policy As a result of these par n sitio of oppo e genc resur 1980s began to see a ties and movements in rural areas. The revival of political competition in regions ased and the regional challenges to Mexico City-b the d change ed nder enge it ing mak n parry decisio was PRI contours of Mexican politics. Just as the sec being transformed from within, and the private po al region tor appeared in organizational flux, the As nce. vengea a litical question was emerging with state ern north the early as 1986, massive protests in g PAN of Chihuahua by supporters of the right-win g to Addin parry. g rulin brought panic within the d reache had rty pove that the concern was the fact to due was this of Part new heights in rural areas. ibu long-term bottlenecks in production and distr land al mun com or , ejido the tion associated with ic practices. Yet much of it was due to the econom pre that crisis a 1981, in begun crisis that had with vented the government from carrying through n uctio the agricultural reforms and new food-prod 1980. in illo programs first outlined by Lopez Port entrs Adding to the misery, Mexicos slow paced siness agribu into the GATT starting in 1987 aided d in at the expense of small holders, and resulte food critical of rts an even greater volume of expo ying stuffs. By the late 1980s, scholars were identif

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p lfnr keep Mexico City po


ii,

or should it turn to other , might oiler iat, if cultivated ing pp I political su ort? Starr

rnic crisis, President Migu rcelul stand on this issue by n, rogram of decentralizatio l ig the structure of politica s lo selopnwnt financing to s. One 9 region autonomy of 2 as to strengthen the nations d ive he felt could be achieve r, nte ce re moved out of the husiness lobbies, and cor s :es prevailed, to the region rt sta s to wa ect of the move ging g regions, by encoura airs. aff te sta d il elections an the er ov , ico ex , v actions M r pa ion sit po op of .urgence as. iral are s rical competition in region ges to Mexico City-based engendered changed the litics. Just as the PRI was c within, and the private se po al tonal flux, the region ging with a vengeance. As utests in the northern state cr5 of the right-wing PAN e ruling pam. Adding to that poserrv had reached is. Part of this was due to u production and distrih d lan al un mm co or eiido, ic om on ec the to e du was 1981, a crisis that pre carrying through with md new food-production v Lopez Portillo in 1980. exicos slow paced entry 1987 aided agribusiness holders, and resulted in l exports of critical foodng scholars were identifyi .Y WORLD Winter 1993

el

al politics. Since the in al poverty and region rur Of nt asa pe w t survived the organiza campesino, or ne ialists and lobbies tha str du the the nuevo movimiento s, tended to repre de ca t time in de ing of the mid-I 980s ffl hu res l na tio rnovement. And for the firs i 3 d northernen of agro-exporters an could no longer be tak ers rry mb pa nu the ge of lar tor t sec sen nt peasa and his allies and traders, Salinas sts ali tri us ind d. sed ba nte for gra to the st-1986 politi it became clear owledged the ness po kn ac ve ha o als ith all these changes, pulations sector. They have phasis on rural po nts in the business em me ed lop ew ve de ren a t cal tha I PR expe mations within the might be politically the sectoral transfor ed niz og rec al rather than urban ones benefits of tran nos loy short-term political re to keep campesi the d an t ! PR si dient if the party we po s of corporatism tha e of strengthening op the historical practice ing nd s, sce ion lat nt pu and hold power in the lac po me lop ty of Mexico-City require a new deve . established the priori tion parties. This would from fit ne be of national politics uld wo s region y labor, in the terrain iaH ec esp to orientation, one where n ga PR! be nt. Accordingly, the iohs and investme in the late ng rti sta , Mexico introduce reforms in position solidiI its political 1980s, that would help ample, ex s. After 1988, for Conclusion with regional population m to gra pro d da ari lid So his FTA is hard President Salinas used icity, ge, irrigation, electr ssas wise in joining NA ina ico dra ex M in r nts the me he est W inv fund by the United poor in cture for the rural ther it was imposed tru he ras W . inf al ow tic kn cri er to oth and linas in an effort s myopic ignored in the parry ngly supported by Sa ly lli us wi vio or s, pre ate ns St tow all sm y, is also diffi an pop the Mexican econom ustrial labor and urb ind re s ctu ard tru tow res ion to tat en ori r, that the move ms rural , It is clear, howeve s. Many of the progra ow sse kn cla le to dd lt mi cu d an r ula pport the and free trade was ve been likely to su onomic liberalization ec s ard tow , beneficiaries would ha ain ag change in the struc y been bypassed once ble by a fundamental ssi po de vern ma ge left-wing PRD had the en chall ican politics. The go avoid this political d practices of Mex an es nals tur sig A FT and Salinas wished to ss do the NA cision to abolish the eii olehearted support for wh s nt 180 me d ne a tur if possible. Salinass de g e hin lis that hav this objective of estab exico and a new PRI M w as ne s a ate St a d ite tern also further aided erv ns Un co with the icsvis-a-vis more es in their relations th gre wi de s on ati ely foothold in rural polit rel lik re d lly constitute have been mo ica tor uld his wo ir o the wh rs in as lde ll ho we pulations. tive small al, and regional po PRD. pit ca the c n sti tha N me PA do or, the lab intersection ver, to support the NAF1A, howe about-face lie in the s for thi of ort s pp gin su ori ss e ina Th Sal this s in the econ lculated stance, and d short-term change ca an st ive be lat his mu cu ps rha of was pe ns acerbated by nt his administratio mation that were ex me for ce d ss lpe cla he d an ion v sit om po policy ions, nationalization, sis, the 1982 hank towards rural populat cri ion bt tat de 1 en ori 198 l ica lit the po new ding starting in d, most of move towards free tra Mexico City. Indee w s slo ard the tow d n an tha r e he rat m fre this change has ployment benefits fro important, however, em t d os an M . nt 87 me 19 est inv be the ted by chang cted to from and been media d States were expe ed ite ult Un res the th th bo wi de r tra anging balance of U.S. bo ern regions, near the l alliances and a ch ica lit po ent ing are concentrated in north ast, and betsseen differ populations, in contr power both within l ica lit the d po an , to ns der; while Mexico-Cit d tio pecte aniza since free trade is ex ir representative org the s, t bu sse cla as s, ge most likely to lose jobs, eti an that these ch smaller, less comp ng tti ns be tio is na as the lin of Sa ny state. support his eliminate ma ich have litical conditions, st proportion of wh ssed by current po tre solidify his gh l tive industries, the large ou wil thr n by turning, A, which in tur , us FT Th NA al. the pit ca on e the nc sta n and in new located in to rural areas in ge th new class forces n wi tio en ion att sit r po l ate ica gre lit A, po the NAFT as and . s in particular, Salin regions in coming years ms eral, and northern region ble pro the n tha re mo to his allies are responding 157
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DIANE E. DAVIS
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cause Mexicos political transformation is still in process. Mexico is still caught between the new the old PRI, between a centralized and regionally dispersed political system, and both sets of forces are hoping for the best. Despite the clear political decline of labor and national industry, these groups are still crucial in Mexican politics, both within and
Vearing

Danger ma lie ahead, however, precisely be

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outside the party that Salinas still claims as his own. the mantle of the Can he be successful in of its princi some party while clearly repudiating the current that say pal members? Also, who is to ssmens busine within reshuffling of political posser opens y econom the once e ss ill stabiliz re gh Althou ers? financi and industrialists to in strong still are sector g bankin strictions on the ed, expect are s change ent, agreem the free trade and if new alliances are made between the oldand
organizations foreign

oot just the newindustrialists and new foreign in vestors, the political arena in Mexico may he opened Perhaps the most salient unknown benefits card is the popular middle classes, ed. from the NAFTA may be regionally hound While Mexico Citys non-labor populations may appreci ate Salinass move away from protectionism and the inefficient capital-labor pact, will they benefit enough from the NAFTA to support this policy in d by definitely? If not, the near future will be plague os Mexic today, and past, uncertainties. As in the ic econom of mix new y a identif leaders will need to fragile the in mainta e to practic al reform and politic combination of classes and regional forces. The fu ture of NAFTA and the future of Mexican domestic political-economic affairs are dependent upon their ability to do so.
up once again.

Notes
cturing in . Foreign Direct investment and Industrial Restru 1. United Nations Center on Transnational Corporations s, 1992), Nation United York: New tion and Regional integra Mexico: GOLVertImCnt Polio; Corporate Strategies, 35. lThe State ch, see, Dietrich Rueschemeer and Peter Evans, 2. For a discussion of the developmental state approa Peter ntion, Interve se Etfecri ying is the Conditions Underl and Economic Transformation: Toss ards an Analys of Cambridge York. in (\es Back State the ng Bringi eds., ol, Evans, Dietrich Rueschemeer, and Theda Skocp Univcrsit Press, 1985), 44-8. o 1 Tre ent and its participation in national politics, see, Raul 3. For a histor of Mexicos organized labor movem Modern eds., g. Hardin Timoth and ton Hamil Nora Delarhre, The Mexican Labor Mosement. 19l-1975, ly Hills, CA: Sage Publications. 1986). 1-205. Mexico: Stare, Econom, and Social Conflict (Bever Mar and businessmens organizations are discussed by lobbies 4. The composition and political role of private sector , France Teresa also, See, . 15-101 : (1970) 66 as o, Jornad cos A. Alcazar Las Agrupaciones Patronales en Mexic o: CANACl>TRA, (Mexic acin Transfurm ia de lndustr Ia de ai Nacion Ensayo Sobre Ia Historia de Ia .i,,iara 1989). Destabilizing. Mexicos Stabilizing Development Was Actually 5. This argument i made by Clark Reynolds, Why rnl decisions insestm and ng financi pment develo the of ion World Development 6 (1978): 100518. For a discuss o Green, El Rosari also. see, s, stration d from earlier admini of the Diaz Ordaz government and how they differe I 93. o, Mexic de o Colegi El o: 973 (Mexic 1940-1 , Endeudamiento Pi.biico Exierno en ,1xico Politico y Echeserria government, see, Julio Lahastida. Proceso 6. For an oversiew of the political bases of the 93-22. 1 : Mexicana de Sociolugia 39 (1977) Dependencia en Mexico: 1970-1976 Ret 7. El Universal, 1 June 1979. 8. El Universal, 11 August 1979. 9. El Universal, 11 September 1979. 10. El Universal, 7 Nos ember 1979. 11. El Universal. 19 March 1980. 12. El Universal, 17 March 1980. 13. El Universal, 18 March 1 980.
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ECON(1IC LIBERALIZATION IN MEXICO

.slists and new foreign in in Mexico may he opened se most salient unknown .c classes, whose henets :gionally hounded. While .opulations may appreci from protectionism and r pact, will they benefit to support this policy infuture will be plagued by .sst, and today, Mexicos y a new mix of economic to maintain the fragile I regional forces. The fu tire of Mexican domestic are dependent upon their

14. IS. 16. 17.

El Un,iersal, 30 October 1979. Proceso, 15 October 1990. 6-7. United Nations Center on Transnaiiona( Corprtaiions, impact on party politics see, Diane E. Davis, Social For discussion of the rise of urban social mosenwnts and their Affairs 43 (1990): 343-67. Movements in Mexicos Crisis, Journal of International ridad is Denise Dressers xeopopulist Solutions to Sohda di nia Progra s 18. One of the best discussions of Salina (L.a Jolla, CA: Center for U.S-Mexico Studies, m Ncolibcral Problems: Mexicos National Solidarity Progra 1991). 19. LaJornada, 9 August 1992. d zation, the Consejo Coordiiiadora Fniprcsarial (CCE) emerge 20. Starting in the mid-1970s, an entirely new organi producing for example, alist, nation truly were ies industr its of many e becaus on the scene with a new voice, hut ption, the CCEs economic priorities did not always consumer (beer) and capital (steel) goods for domestic consum less supportive of government intervention in much was it gh althou A, CINFR CANA challenge those of the industry. 21. LaJornada, 7 August 1992. alization on financial concentration see, Sylvia Maxfield, 22. For an insightful account of the Impact of hank nation Politics (Ithaca, NY: Cornell University Press, 1990), 154. an Goierning capital: International Ft;iance and Mexic , Mexico y Ia Glohalizacin Financiera, La Jornada, Puente dez y Hcrnn sco Franci and 23. Rosalha Carrasco Licea 10 August 1992, 35. 24. Maxfield, 157. 25. Ibid., 158. sarial en ci Gobierno de Miguel de a Madrid, Foro Inter 26. Rogelio Hernndez Rodriguez, La Conducta Empre : nacional 30 (1990) 759. LaJornada, 7 August 1992, 34. Anos Despues 27. Salas Gutirrez by Alberto Barranco Chavarria, Diz . 759-60 ld, 155; Rodriguez, 28. Much of this information comes from Maxfie Mexico (Mexico: El Colegio de Mexico, 1986). 29. Blanca Torres, ed., Descentrjb;ac,n y Democracia en porary The Embeddedness of State and Class Conflicts in Contem

I Industrial Restructuring in ork: United Nations, 1992j, nd Peter Evans, The Stare tfectise Intervention, Peter In (New York: Cambridge ,.sl politics, see, Raul Treo thy Harding. edt.. Modern 986), 177-205. itions are discussed by s!ar )1. See, also, Teresa Franco, (Mexico: CANACINTRA.

30. Diane E. Davis, Divided Over Democracy: Mexico, Politics and Society 3 (1989): 247-80. sino: Un Modelo para Armar, La jornada, 4 August 1992. 31. Luis Hernndez N., El Nuevo Movirniento Campe
7-

as Actually Destabilizing,
ng and investment decisions %ec, also, Rosario Green, El ico, 1973). astida, Proceso Politico s -227.

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