Mexico:
Under the Volcano:
The Reform Process in Mexico

Oct 30, 1997

In July, the PRI (Institutional Revolutionary Party), Mexico’s ruling party, lost its commanding majority in the lower House of the Mexican Congress. The new Speaker of the House came from an opposition party for the first time in seven decades. In the same elections, the PRI also lost for the first time its grip over the Federal District, which includes Mexico City. The man elected, Cuauhtémoc Cárdenas, is a leader of the PRD (Revolutionary Democratic Party). His electoral victory puts him in a leading position to run for the presidency in the year 2000.

The fact that a ruling party loses an election is ordinarily not a particularly remarkable event in the world. But in Mexico, the PRI has held a monopoly of power for almost seven decades, longer than any other ruling party in the world. Its control, which for most of this time has been virtually unquestioned, began to be loosened only in the last 10 years. The July election was seen as an historically crucial step in this process. The PRI let the election go through; the opposition parties declared the elections to be relatively free of cheating; after the election the PRI allowed the oppositionists to assume office. Such actions were unprecedented.

Of course, the PRI still remains by far the largest and most powerful party. It still controls the all-powerful presidency. It still controls most states and cities. It still holds more seats in the Chamber of Deputies than any other party. And the PRI continues to be intertwined with the state apparatus and the main pillars of the economy, as well as the main mass institutions, such as the trade unions.

But the election results are part of the devolution of power away from highly centralized one-party rule which had emerged after the Mexican Revolution. Starting in the 1920s, all government members, army officers, civil servants and judges came from the same party. The president had quasi-imperial powers, with one exception: he could serve only one term. The revolution, which had overthrown the 34-year dictatorship of Porfirio Díaz (1876- 1910), produced a constitution which specified that a president could not succeed himself. So after each president’s single six-year term, the sexenio, he chose his successor from the governmental party.

Mexico had all the trappings of bourgeois democracy: executive, legislative and judicial branches, with several parties and regular elections. But a monopoly of power was concentrated in one party.

Economic Crisis and Reforms

For a period, the highly centralized government structure fostered industrialization. The state became the rector (regulator or arbiter) that controlled and guided the economy and tried to prevent U.S. economic domination. Over time, the government implemented specific polices to encourage substituting locally produced goods for foreign-made goods. Such import-substitution industrialization characterized economic planning in Mexico until the early 1980s. The government promoted this policy through import licensing, subsidies for infant industries, high tariffs and some nationalizations. By the mid-1960s, the relatively high rate of growth of the Mexican economy led people to call it the Mexican "miracle."

However, the world economic crisis in the 1970s and the debt crisis that hit all underdeveloped countries in the early 1980s hit the Mexican economy hard. In 1982 the Mexican economy was the first to default on its loans with the world banking community, especially, of course, the United States. The loans were renegotiated, under U.S. terms. The U.S., which already dominated important aspects of the Mexican economy, demanded that the government open the economy to greater U.S. investment, ownership and trade.

The PRI itself began the process of wrenching the economy from its nationalist protectionist policy to the kinds of economic reforms that go by the heading "neo-liberal," that is opening the economy up to competition and foreign investment. Nationalized industries, such as the telephone company, banks, radio and television stations, were sold. Other financial companies, formerly protected by the government, were opened up to outside investment. Investment in the maquiladoras on the border with the U.S. was expanded.

This economic restructuring culminated with the passage of NAFTA, which went into effect in 1994.

The Impact of U.S. Capital

Starting in 1986, international trade and investment, especially with the U.S., increased at a fast rate. From 1991 to 1995, Mexican exports almost doubled, going from 42 billion dollars to 79 billion dollars, while imports went from 49 billion dollars to 72 billion dollars. As for cumulative foreign direct investment, it increased from 26.5 billion in 1989 to 47.9 billion in 1993, with foreign direct investment in manufacturing going from 17.7 billion to 24.1 billion.

But at the same time, many industries for domestic production withered. As a result, overall production hardly grew. And neither did the size of the manufacturing working class. The OECD (Organization for Economic Cooperation and Development) in its 1997 survey of the Mexican economy describes the situation: "Faced with depressed domestic demand and the elimination of border protection, Mexican industry reoriented itself toward external markets. Since 1987, most jobs have been created in exporting firms, but more particularly in the maquiladora industry, which accounted for more than 20% of manufacturing employment in 1993. The nature of maquila work has evolved over time: while textiles used to be the main activity, more recently, fabricated metal products, machinery and equipment (mainly car production and electric and electronic materials) have become the most dynamic branches, in terms of both production and employment. ... The dynamism of the maquiladora industry has been having little spillover effect in terms of job creation in other firms. As most inputs are imported (98% in 1988), the degree of integration with the rest of the productive system is low."

According to the OECD, with the workforce growing by about three or four percent per year, "In the last decade or so, the service sector absorbed most new entrants into the labor market, as well as workers dismissed from other sectors, accounting for a growing share of the workforce. This trend, which had already started in the 1970s, became more pronounced after the recession of the early 1980s. Between 1991 and 1993, 89% of the jobs created were in the tertiary sector. ..."

And where in the service sector, or tertiary sector, has this job growth been? Notes the OECD, in the 1980s and ’90s, the net creation of jobs that paid actual wages has been "almost nil." Most new so-called jobs "... have been in informal activities with a predominance of self- or family employment." In other words, according to these economists, job creation has taken place only in the non-wage, small and micro-enterprise sectors. These jobs have been of uncertain duration and with no access to health benefits—in other words, handy work, peddling and begging. Almost half the workforce is now considered "informal."

The job situation has deteriorated even more in the countryside. According to the OECD, "Agricultural employment has been shrinking, although at a lower pace since 1980." And yet with no real jobs in the city, millions of peasants are still forced to stay on the land, "suggesting that the sector absorbs a large part of excess labor supply."

With such a high proportion of "excess labor" in the countryside and "informal" labor in the city, wages and income are falling. Says the OECD, "Unlike in many OECD countries, wages in Mexico respond flexibly to cyclical conditions. Real wages adjusted sharply after the debt crisis. Overall, real wages fell by a cumulative 40% between 1981 and 1988, while the average real wage of employees insured in the IMSS [Social Security] lost 54% of its value over the same period. Although they increased from 1989 onward, five years later, in 1993 they were still well below their 1981 level."

In fact, this appears to be an exceedingly optimistic calculation. According to the Businessmen’s Coordinating Council in Mexico City, wages fell by 50% since 1994, that is, in a little over two years. The Economics Department of the National Autonomous University of Mexico calculates that workers’ purchasing power lost 69.4% of its value in the last nine years.

This steep fall in wages has caused poverty to double in 15 years. According to the Inter-American Development Bank, in 1995 40% of the Mexican population lived below the official poverty line. Mexican health agencies report that more than seven million children, more than one out of three, suffer from malnutrition. According to the Secretary of Public Education, malnutrition is leading to a reduction in the stature of Mexican children.

Social Ferment

In this last period, Mexican society has been marked by an undercurrent of social ferment, occasionally breaking into the open. Perhaps the most dramatic was the Zapatista peasant uprising in Chiapas which began in January 1994 and still persists, even if it remains isolated. At the same time other peasant movements, including land occupations and the occupations of government offices in the impoverished states of Oaxaca, Tabasco and Guerrero, continue.

Over the past year in different parts of the country, starving peasants, including women and children, have carried out at least a dozen major train heists for food, blocking the tracks with boulders, overpowering the train crews, and carrying away corn or other staples. This has not been seen in Mexico since the period preceding the 1910 Revolution.

Mexico City has also become an enormous magnet for protests and demonstrations. Not long ago, just about the only demonstrations in Mexico City were those led by officials. But this changed dramatically with the advent of the crisis: the number of demonstrations has grown steadily every year. The average number is currently running at about 12 to 15 per day. They include fired workers, cheated workers, peasants demanding land, indigenous people demanding civil rights, mothers demanding better schools or adequate housing and city services, debtors demanding relief from interest rates of over 130%, voters demanding reform or prison for corrupt officials, etc., etc., etc. The protestors block streets, disrupt traffic, camp in parks, occupy the squares and plazas. And sometimes they invade official buildings, including the House of Deputies.

So far the government has allowed the demonstrations because they serve as a safety valve. But, complained one government official to the Los Angeles Times (August 31, 1996), "Every day they get more aggressive."

Trade Unions Led by Dinosaurs

While protests are up, strikes have been down. Last year there were about 40 strikes. This year, there will probably be only about 30. There can be many reasons for this decline, such as the economic pressure exerted by the unemployed and the huge informal sector, which continue to grow with the worsening economic crisis. However it also reflects a veritable dictatorship over labor imposed not just by the bosses and the government, but by the CTM (Confederation of Mexican Labor), the old trade union structure. This structure has resorted to any and all methods, including outright gangsterism and murder, to impose the bosses’ order.

Since 1929, when the CTM was incorporated into the PRI, the CTM has acted literally as the arm of the state inside the working class. Over the years the CTM has developed into a monolithic and docile partner of the bourgeoisie. For over 50 of those years, the CTM had been led with an iron hand by Fidel Velazquez, often known as the "grandfather of the dinosaurs." This past June, Velazquez finally died in office at age 97.

With the deepening of the economic crisis in the late 1980s, the CTM joined with the government and business to negotiate yearly national wage pacts that systematically impose ever larger sacrifices on the workers. After the peso crisis hit in 1994, the CTM canceled the annual May Day demonstration, out of fear that with large numbers of workers brought together, spontaneous outbreaks might result. Since then, on every May Day the CTM holds a public meeting led by President Zedillo.

Of course, the constant diet of sacrifices for the workers has cost the union apparatuses themselves. Several years ago, the government decided to "restructure" the oil industry, and union jobs went from 185,000 to 85,000 overnight. This hemorrhage continues. Currently, the 100,000 member railroad workers union is facing 55,000 layoffs as the state sells off the largest routes to private lines. So the unions are shrinking.

They are also losing influence. In early October, for example, workers employed in a truck chassis fabrication plant in Tijuana succeeded in kicking out a CTM-affiliated union in order to bring in an independent union. This is the first time that this has happened in a maquiladora. Certainly, one plant does not make a trend. But if things continue as they are, more workers with nothing to lose may show the same determination as these chassis workers.

Some union officials of the CTM have begun to raise the problem of the CTM’s decline. About two years ago, a loose coalition called Foro (the Forum) was formed inside the CTM in order to reform the union’s structure. Led by Francisco Hernandez Juarez, the head of the telephone workers guild, Foro’s main plank was a demand that the unions cut their formal ties with the PRI and not be affiliated with any political party. At the end of August, this coalition held a general assembly to announce that it will formally secede from the CTM and hold the founding convention of a new organization, the National Labor Congress, at the end of the year. The breakaway unions are still outnumbered nearly four to one by the CTM, which has more than three million dues-paying members and claims to represent five million workers. However, Foro is continuing to draw other unions into the fold, the latest being the 200,000 member union of Social Security workers.

This is not to say that Hernandez or the other leaders of Foro are politically different than the old CTM leadership. Like all the other unions, Hernandez’s union has settled for layoffs as well as wage increases far below the rate of inflation, rather than lead any big struggles. Hernandez himself was given his position as head of the telephone workers by former President Carlos Salinas.

Today there is no pressure from a workers’ movement which forces Hernandez to reform the union structure and to take a distance from the old, rotten, discredited system. But there is always the possibility, given desperate social conditions which can only grow worse, that this situation could change rapidly and a movement spring up. In advance of that eventuality, Hernandez has set up an organizational structure which can serve as an alternative if workers were to enter the road of struggle; an alternative which could channel a movement in a direction which does not put the whole bourgeois system in danger.

Reformers and Generals

What Hernandez is doing at the level of the unions, the bourgeoisie is trying to do at the general level of the government. For the U.S. and the Mexican bourgeoisies, one-party rule in Mexico is something of an anachronism.

First, the PRI presents difficulties similar to those created by the old political machines in U.S. cities years ago. Those political machines, like that of Boss Daley in Chicago which was based on political patronage and cronyism, sometimes got in the way of doing business.

Such problems were voiced recently by an exasperated Canadian ambassador. Apparently, the Canadian company, Bombardier, which may lose a big contract to build subway cars for the Mexico City Metro, had become incensed by the PRI’s constant demands for ever more bribes. According to the ambassador, the demands for bribes in Mexico are even more outrageous than in the Middle East or, yes, Russia.

Needless to say, the Canadian ambassador was forced to resign because of his remarks. Nonetheless, international and Mexican business interests had already reached some kind of consensus that the Mexican government would have to be "reformed," "streamlined" and "modernized" for the sake of business. That meant, first of all, that the old ties between the PRI and the state would have to be severed in order that the Mexican state should not be treated as the private property of just one party.

For business, there was another overriding reason for nudging the PRI out. Before the crisis and the economic reforms, the rule of the PRI over the population had resided on nationalist illusions and imperatives. But with the economic reforms that the PRI presided over, the expansion of the maquiladoras, NAFTA, etc., the PRI was selling off the assets of the country to the foreigners. So it couldn’t exactly call on people to put their rising discontent behind the needs of national unity anymore. The PRI, in fact, had put itself in the position to take the chief blame for the crisis.

So the one-party rule of the PRI had to go. In its place, the bourgeoisie would obviously prefer a more elastic form of rule based on the tried-and-true formula of politics by competing parties.

There had been one, long-standing opposition party to the PRI, the right-wing PAN (National Action Party), the party of the Catholic Church and the northern industrialists of the country’s third largest city, Monterrey. Alongside the PAN, a grouping emerged in 1987 from inside the PRI that eventually became the leadership of the PRD. Several PRI leaders, including Cárdenas, the son of former President Lázaro Cárdenas and the former PRI governor of Michoacán; and Porfirio Muñoz Ledo, the former PRI secretary general, went into opposition, trying to pick up the fallen nationalist, populist mantle of the PRI. In so doing, Cárdenas and the PRD absorbed other leftist currents, including the remnants of the old Mexican Communist Party.

Certainly, popular sentiment, tired of the PRI, was ready for almost any opposition that appeared. When Cárdenas ran against the PRI’s Carlos Salinas in the 1988 presidential election, Cárdenas almost certainly received the higher vote total. But Salinas openly stole the election through outright fraud. The PRI was not yet ready to relinquish its power; and it had not been forced to, neither by a popular mobilization, nor by pressures from the Mexican bourgeoisie or American imperialism. But once in office, Salinas was given little choice but to allow reform to continue. The PRI accepted that two governorships would be held by the opposition PAN.

The following nine years have been marked by big power struggles inside the PRI, with the assassinations of the PRI’s 1994 presidential candidate, Luis Donaldo Colosio, and the PRI’s secretary general, José Francisco Ruiz Massieu, a few months later. Neither of these assassinations were ever solved. But they were then followed by the imprisonment of the brothers of Carlos Salinas and Ruiz Massieu on charges of accepting millions and hundreds of millions of dollars in bribes from drug dealers, among others. At the same time, with the collapse of the Mexican economy barely a month after he left office and with charges of corruption swirling around him, former President Salinas went into "voluntary" exile.

For the bourgeoisie, this crescendo of scandal and assassination confirmed that the PRI had become so corrupt and rotten, it no longer was capable of ruling, or fulfilling its task of imposing order on the population. This is why the July elections, which ousted the PRI from the majority in the Congress and its control over the government district that includes Mexico City, led to the Mexican stock market going up substantially.

Even before the election, the U.S. government and ruling class had given the oppositionists their vote of confidence. In the spring, Cárdenas and the leaders of the PAN journeyed to Washington for an official meeting with Clinton. This unprecedented meeting of the U.S. President with oppositionists before an election served as a U.S. benediction. Cárdenas then traveled to Wall Street where he was received by U.S. business, which was pleased to hear about his stance on NAFTA, the outstanding foreign debt, the fate of U.S. investment and trade with Mexico.

With the rise of the recycled politicians of the PRD and PAN, the reform process continues to move forward. But at the same time, the bourgeoisie is also preparing for the eventuality that the reforms might not work, that is, they won’t succeed in maintaining political stability. In that case, the bourgeoisie is prepared to turn to the military, which historically has remained loyal to the PRI, and which has been used to smash strikes, student demonstrations (as in Mexico City in 1968, when it murdered hundreds), peasant revolts and guerrilla movements.

Over the past years, the military’s role has been increasing. The military is occupying the poorest southern states, including Chiapas, Guerrero, Tabasco and Oaxaca, where there have been peasant rebellions and movements to occupy the land. In the cities, the military has been brought in to patrol the streets of a few working class neighborhoods. At the same time, a general recently was brought in to run the police department of Mexico City.

Of course, for both U.S. imperialism and the Mexican bourgeoisie, a possible military option does not come without problems. First, the military is at least as corrupt as the politicians. When General Jésus Gutiérrez Rebollo, who came complete with the endorsement of the U.S. Drug Enforcement Agency, was installed as Mexico’s drug enforcement chief in December 1996, it was in order to get around the corruption of the federal police. Yet, within three months of assuming office, Rebollo was arrested and charged with having secretly worked for Amado Carrillo Fuentes, one of the most powerful of the drug traffickers.

Both for U.S. imperialism and the Mexican bourgeoisie, the problem is to try to install a government that is less corrupt and more able to rule over the population. As for the working class and poor, for whom capitalism, in all of its different guises, nationalist or "neo-liberal," has meant only increasing misery, the problem is to begin to find a way to mobilize to get rid of the cause of that misery.