Where Is Mexico Going?

The year 2004 is beginning and with it also the second half of Vicente Fox's term in office. On the international level, turbulence and crises on all levels will be on the agenda. While it is certain that there is a possibility of economic growth, this does not mean that the crisis of Mexican capitalism has been resolved, nor that stability will be possible. On November 27, for the first time, a packed public square chanted the slogan of a general strike. But this is only the beginning; the principal struggles of the workers, in defense of their economic interests, as well as against the capitalist system, have barely started. The year 2004 is beginning and with it also the second half of Vicente Fox's term in office. On the international level, turbulence and crises on all levels will be on the agenda. While it is certain that there is a possibility of economic growth, this does not mean that the crisis of Mexican capitalism has been resolved, nor that stability will be possible. If anything has been characteristic of the last 20 years in the whole world, it is the fact that, with or without growth, attacks on the living standards of the workers and on their rights, have continued without letup.

The problem is not that the economy is growing by 1%, but that the economy is impoverishing millions of people and making the same rich people, as usual, more and more wealthy.

In our country, the final months of last year witnessed the abrupt entry of a workers' movement of great importance. On November 27, for the first time, a packed public square chanted the slogan of a general strike. But this is only the beginning; the principal struggles of the workers, in defense of their economic interests, as well as against the capitalist system, have barely just begun. Though one flower does not make a spring, it shows that spring is coming and that we have to prepare for it.

In this article, we will try to put down some general lines on the economic and political perspectives for the present year, which will, we believe, lead to a qualitatively and quantitatively greater class conflict.

The Economy

Mexico is a dependent capitalist country; its population, its industry, its natural and human riches put it among the 15 most important countries on the planet. Nevertheless, it is a subordinate country, which has built its capitalism in a manner completely subservient to the needs of international capital, especially North American capital.

During the last 25 years, in spite of having experienced periods of crisis and some growth, those who rule us have only known how to ask us for one sacrifice after another; when there is crisis, "in order to get out of it," and when there is growth, "so that it may not be endangered." As a result of this, the minimum wage has fallen by 300%, and more than half of the Mexican population lives in poverty. 15 million Mexicans have tried to flee their suffering through emigration to the United States, and we have changed from being a country that exports food to one that imports food. In spite of this, Fox says that
this is a marvelous country; in truth, it is, but he fails to mention that this country is marvelously mistreated and exploited by a corrupt bourgeoisie, of whose subservient nature Fox is a faithful representative.

But let us briefly review the economic data. Unless otherwise indicated, the numbers presented come from the Secretariat of Finance and Public Credit and correspond to reports on the economic situation, public finances and the public debt in the third and fourth trimesters of 2003.

The banking system

During 2003, the profits of the banks were close to 30 billion dollars; in the period from January to September, bank profits were only 21,778,600,000 pesos. In fact, this shows the inability of private banking to survive by itself, given that from January to September
29,703,000,000 pesos were transferred to the banks as government support.


Fox promised 7% annual economic growth; in reality we could optimistically talk about an average of 0.6%, which, in fact, means a decrease, given that our population is growing at a minimum of 2% annually.

The key characteristic of the health of any economy is industrial production, which has shown a free fall since Fox's administration came to power. Actually, the fall during three years, taken together, has been 6%; this was above all owing to Mexico's dependency on the U.S. economic cycle, which we will analyze later.


As for employment, the Secretariat of Work and Social Security indicated that in the last three years a net loss of 584,333 jobs has taken place; that is, every year almost 200,000 jobs have been lost. Let us compare this with the promise of 1,300,000 jobs annually, which Fox made while he was running for office. From this we can draw the conclusion that we are owed 4,500,000 jobs.

Fox's policy in regard to jobs continues firm and is in agreement with his "New Labor Culture." He is destroying stable employment: in fact, of the 584,333 eliminated positions, 90.8% were for permanent workers.

Wages and Inflation

We have witnessed a decrease in inflation to levels below 5%; nevertheless, this is neither an accomplishment of the government, nor is it the solution of any basic problem of the economy at all. The fall in the rate of inflation results from the restriction of the amount of money in circulation that the Bank of Mexico has carried out for more
than 8 years already. Reducing the amount of money in circulation lowers the prices of goods and services. Basically, a lack of liquidity in the system in its entirety forces a stagnation of prices. As for the benefits of low inflation, there is little to celebrate: for all of 2003, wages increased by a nominal 5.2%. If we compare this with inflation, which approached 4%, there is nearly no wage increase.

When we look at the increases by sector, we realize the hard facts that are the reality. For example, the increases in real terms in the manufacturing sector were 0.4% and in the assembly-plant industry there was a fall in wages of 1%. Paradoxically, the increase in productivity of the manufacturing sector was 3.8%; this shows that the government's claim that the workers earn more if they are more productive, is false. In fact, this year, they were more productive, and they earned less.

Imports and Exports

Since 1998 there has been a deficit in the balance of trade, that is, Mexico buys more than it sells. These are the figures from the Secretariat of Finance in billions of dollars per year:

1998 -7 931.5
1999 -5 553.7
2000 -8 003.0
2001 -9 953.6
2002 -7 916.2
2003* -3 000

* for the first six months

While it is certain that in 10 years time Mexico has tripled the quantity of products that we export, it is also certain that Mexico is importing much more. In the last 6 years alone, we have sent overseas, mainly to the United States, a sum of not less than $45,500,000,000.

Foreign debt and international reserves

The bourgeoisie and their economists will certainly presume that the increase in international reserves to historic levels has been an "achievement." One would have to say that, by itself, this has no significance. These reserves show that there are resources for investment in the economic development of the country. How is it possible to claim that there are no resources to develop PEMEX and the electrical industry when billions of dollars are transferred to the banks, and, at the same time, billions of dollars in the reserves are left in inactivity? It is said that this is a way of avoiding a possible evaluation. Nevertheless, no one says that the only way to guarantee the stability of the rate of exchange is to have a growing economy. Anything else is simply a way of applying cosmetics to the reality of the situation.

Nor has the public debt been substantially modified: its size represents 26.8% of GDP, which has meant the annual transfer of $11,602,000,000 that is, almost 2% of GDP.

In short, there is indeed money, but it is used to fatten the national and international bourgeoisie.

Productive Investment

This is a section in which we can speak of stagnation; the gross formation of fixed capital is only 20% of GDP, a section in which Mexico is also below countries like Honduras. As far as productive investment from foreign countries is concerned, what happens is a true debacle; in 2001 it was 26 billion dollars, in 2002 it was almost 14 billion
dollars, and for the year 2003, it will probably not exceed 10 billion. For a dependent economy like Mexico, (which gave up 8 billion dollars every year for commerce alone and 11 billion for payment of debt interest) it is almost essential to maintain a certain equilibrium, a stable, elevated level of direct foreign investment, but, as we see, in two years this has decreased to less than half, and the tendency will be for the fall to continue.

The economic cycle in Mexico and the United States

The graph below (put together by the Bankers Association of Mexico) shows that since the beginning of the Fox administration, economic growth plainly appears to reflect what happened in the United States, which is not strange when 90% of our foreign trade depends on the U.S., and when practically all the springs of the economy are controlled by the U.S. bourgeoisie.

Economic perspectives

More than 10 years have now passed since NAFTA was put into effect; this is a period during which the Mexican economy has appeared as an important component of the U.S. economic system. Such a dependence and subjection to a foreign economy like that of the U.S. has never existed before in the history of Mexico. Nevertheless, this subjugation has not meant either improved standards of living nor perspectives of a mid-term or long-term improvement. Since NAFTA was signed, more than 8 million people have crossed the border with the United States, in flight from misery. This exodus, one of the largest in our history, is the best sign that capitalism is unable to offer an alternative to the working masses of Mexico.

Our dependence on the U.S. economic cycle finds its political expression in the subjection of the Mexican government to the United States. The U.S. rulers do not need discerning politicians or experts in anything to keep this situation unchanged; they only need a puppet like Vicente Fox, that caricature of a statesman, who is a faithful representative of his social class, the Mexican bourgeoisie, servile and unable to act by

Our dependence on the U.S. economic cycle subjects the perspectives of economic growth to what could happen in the United States; undoubtedly growth at a moderate rhythm is possible. Nonetheless, this does not mean any significant benefit for the working masses. The fundamental problem is that the United States has entered a long period of economic stagnation, characterized by periods of little growth accompanied by
more or less serious falls, which will cause important social and political conflicts. What happened in Japan in the decade of the nineties is a clear example of what will happen to the United States.

It is really possible that Mexico could have economic growth of between 2% and 3%, but it is almost certain that, sooner or later, we will have a new relapse, whether with zero growth or with an obvious recession.


In this framework, the bourgeoisie will try to establish its structural reforms by all possible means, which will provoke a deepening of the crisis of the Vicente Fox government, as it becomes unable to satisfy these demands in the manner the bourgeoisie attempts to.

This does not mean that Fox will not try to establish structural reforms. In fact, the members of the PAN have already declared that they will urge their fiscal reforms at the next National Budgetary Convention. Nevertheless, it is not very likely that the proposal for a VAT will be successfully imposed, as the members of the PAN propose. Although this might happen, it would not be more than a declaration of intentions as will be necessary to confront a hostile congress and, above all, to confront important mobilizations on the part of the working masses.

The Fox government

The government of the PAN is characterized by this extreme weakness: the program of the bourgeoisie cannot be fully realized in practice, and this makes the Fox government look inept in the eyes of the big bourgeoisie. Undoubtedly, they would not look unfavorably on a possible resignation, if that did not involve bigger imbalances. For the present, they are concentrating their hopes on possible replacements, in spite of the fact that almost half of Fox's six-year term is gone.

As a political organization that most faithfully represents bourgeois interests, the PAN will be the scene of a confrontation that will become more serious as time passes and the end of Fox's six-year term approaches. While Fox has used various ways to strike at the group of Diego Fernandez de Ceballos, this appears to be the only option of further PAN rule as it faces the failure of the government, and it is highly probable that a candidate to succeed Fox will rise from the ranks of the "chief" or in agreement with Fox.


The PRI is also suffering a crisis which results from its transition from an apparatus of the state to a political party. Before 2000, the PRI was led by direct representatives of the bourgeoisie like Salinas and Zedillo with their entire gang of technocrats. Although the bureaucratic machine was adjusted to establish control over a social movement, it remained more or less united around the executive power, which was its main arbiter and source of privileges. .

When this relationship was broken as a result of the electoral defeat in the year 2000, a rupture also took place - and this rupture is gradually deepening. On the one hard, the technocrats, who, at heart, are the most loyal lackeys of the bourgeoisie, are fulfilling their role better outside of the PRI, whether as functionaries of the state machine (Gil
Diaz y Ortiz) or directly as employees of large enterprises (the case of Zedillo). On the other hand, the bureaucrats, lacking presidential patronage, are depending solely on the control, great or small, that they enjoy over their unions, peasant organizations, neighborhood organizations, federal entities, and regions. Thus they are creating many small PRI's, each one defending its small power preserve, each one offering distinct qualities to the bourgeoisie, and each one confronting the others, which, inside or outside the party, appear as dangers, real or imaginary, to what remains of their slice of power and privileges.

Elba Esther Gordillo corresponds to those members of the bureaucracy who believe they will be able to hold on to their privileged position thanks to a servile posture toward the executive power. Her head-on failure in the attempt to impose a VAT on medicines and food will further weaken the members of her coterie in the bosom of the PRI. They will not break with the PRI, because outside of the PRI the perspectives are no better than inside, but they have neither the same politics nor the same interests as the other groups inside.

Madrazo is only one of many local political bosses in the PRI; he agrees with them that the structure of the party must be maintained as the only hope of regaining control of the state machine. What those people say is an example of demagoguery rather than a serious intention. We see an example of that in the budget debate. While they opposed the VAT on medicine and food, they did not hesitate to vote together with the PAN for the budget expenditures and revenues which can be summarized as "more for the rich, less for the poor." Something like that will happen in the future: they will be the opposition on something that costs them little, and they will be with the PAN when the future of the regime is endangered.

Another layer of PRI politicians are those who depend directly on union, peasant or popular organizations. These are politicians who can be strongly disputed by their supporters, and even forced to adopt positions that at other times we would consider unimaginable. This sector can be dragged along, unless it is swept away by events.


The PRD is, perhaps, the organization which, owing to its composition and relation to political power, is least susceptible to a deep crisis like those which the PRI and PAN are experiencing and will experience. At the same time, the PRD is the only national party capable of being affected in a constructive manner by the movement of the masses.

For the moment, the bureaucracy has established a statutory blockade, a kind of armor, to prevent the workers and the youth from participating in the PRD. At the same time, the bureaucracy is forced to use more or less aggressive language from time to time. Nevertheless, every serious movement of the workers and the youth will be sooner or later reflected in an intervention in the party and will open up spaces for the construction of genuinely leftwing and centrist currents inside the PRD. But undoubtedly it will be events which lead to a change within the PRD, not changes in the PRD which force events, at least as far as the workers movement is concerned.

A sign of this is the fact that on January 21 the leaders of the PRD and the PAN signed an agreement to run joint candidates in at least four states: Chiapas, Durango, Chihuahua and Oaxaca. That is, the leadership of the PRD is again orienting toward an alliance which blurs the party as an alternative, confuses its militants and workers in general, condemns the party itself to become a front man for the PAN and to disappear in real terms in the four states, given that in all of them, it will be the PRD that supports the PAN and not the reverse; exactly what the PRD does not need is to appear before the workers as a prop for the government.

There is no doubt that it will be the crisis of the regime, as much on the economic and political terrain, but above all the big mobilizations of the masses, that break with the bureaucratic and servile logic that is favored in the PRD. Nonetheless, it is a fact that a big layer of the present leaders in the long run will prefer to defend the system rather
than the working masses. For this reason it is urgent from now on to prepare the rank and file for a truly revolutionary and socialist alternative inside the PRD, which is the only thing that can transform the party in a progressive direction.

There is no doubt that the next period will continue to be characterized by a deepening of the erosion of bourgeois parties and institutions (even though it some intellectuals enjoy confusing those who listen to them by talking about a crisis of politics in general), and by an abrupt entry, ever more notorious and decisive, by the workers movement.

The workers movement

The crisis of the official unions continues. Cracks appear on all sides, and the situation is such that already many leaders are beginning to change what they say and even pointing out the relevance of a general strike, as is the case with Hernández Juárez. They do this from fear of losing control of the situation inside their own unions.

Events continue to drag many leaders along. In many cases the union bureaucracy cannot gamble on making things unpleasant with strikes in order to negotiate halfway results later on. This is the case at the Mexican Institute of Social Security, which will soon face a struggle to defend its conditions of work and retirement. We could say much more about the electrical workers, whose struggle against privatization with take place with the leaders of the Mexican Electricians Union, or in spite of them.

Other sectors that have traditionally constituted strong leftwing currents in the bosom of the official unions, like the National Education Workers Coordinating Committee (CNTE), will take new positions after years of stagnation. The teachers union leadership is seriously eroded, and while its control mechanism still allows it to obtain artificial majorities in the congresses, divisions inside the PRI itself will create opportunities for the strengthening of the CNTE, provided that a policy of linking up with all other movements in struggle is carried out and isolated action and erosion are avoided.

State workers will be protagonists in struggles on different fronts. One of them, perhaps the first of the season, will be against Fox's attempts to fire 50,000 workers.

A movement that advances by defending itself, a bourgeoisie that goes backwards while constantly attacking, these will be the mark of this year. Events on an international level, including in the United States, show us that things are changing, and that although at different tempos, the hour of response is arriving not just of saying, "Enough!" and resisting.