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Mexico in Transition

Neoliberal Globalism, the State and Civil Society

Fernwood Publishing and Zed Books Ltd

Mexico's double movement: neoliberal globalism, the state and civil society

GERARDO OTERO

§ the purpose of this book is to address the impacts, challengers and alternatives to neoliberal globalism in Mexico. Because the main impacts of neoliberal globalism have negatively affected the peasantry, the working class and middle classes in rural and urban Mexico, we pay most attention to them. Given that the ruling classes and the Mexican state have been the main architects of neoliberal globalism, along with suprastate organizations such as the International Monetary Fund and the World Bank, we focus our attention on challengers and alternatives coming from below, particularly from the subordinate groups, classes and communities that are becoming increasingly organized in civil society

In this chapter I provide a broad conceptual and historical outline of what neoliberal globalism has involved for Mexico during the past two decades in economic and political terms, and how organizations in civil society have responded to its challenges. I will first draw on Karl Polanyi's classic work, The Great Transformation (1944), to outline conceptually the most salient impacts of the process of economic liberalization in Mexico. Polanyi is arguably the classical social theorist who, after Karl Marx, has mounted the most forceful critique of market society (Block and Somers 1984). If Marx focused on the alienating and exploitative nature of capitalist production, Polanyi focused on the market's ravaging effects on the fabric of society itself. Among many other ideologues, he targeted Hayek and von Mises, two of the idols of today's free-marketers. I also draw on the work of Antonio Gramsci and my own past work to outline briefly a conceptual framework for understanding the rise of civil society organizations that are contesting neoliberal globalism and the limited character of the electoral democratic transition from below.

The second section provides a brief historical outline of the two cycles of 'double movements' in Mexico, in which a strong drive to economic liberalization has been followed by society's protective responses. This will set the context for the third section on Mexico's economic integration with its northern neighbours, which has taken place silently or openly since the onset of the debt crisis of 1982, i.e. before and after the establishment of the North American Free Trade Agreement (NAFTA), in place since 1994. Throughout these sections, I draw parallels between concepts and history and make reference to the chapters that follow which offer in-depth coverage of the various central issues brought about by neoliberal globalism and the rise of civil society.

Neoliberal globalism, the state and civil society

The true criticism of market society is not that it was based on economics – in a sense, every and any society must be based on it – but that its economy was based on self-interest. Such an organization of economic life is entirely unnatural, in the strictly empirical sense of exceptional. (Polanyi 1944: 249)

The purpose of this section is to present a conceptual discussion of neoliberal globalism, by drawing on Polanyi's work. Given his focus on the transformation of economic relations, I will supplement this with a discussion of civil society as the sphere in which society's protective movement has been located against the state and the privatized economy today. My main argument is that a merely liberal democracy is insufficient to address the societal threats posed by neoliberal globalism. A variety of social movements must consolidate civil society to accomplish a reform of the state and its economic programme, so that human development can be taken care of and the natural environment sustained.

Polanyi and society's double movement

Polanyi's main argument is that the movement to create a 'self-regulating market' was the result of a utopia that can never be fully realized without at the same time destroying society. The uniqueness of nineteenth-century society lies in its motive and justification for action, which has once again been placed centre-stage by neoliberal globalism: gain. If all human history is ultimately conditioned by economic factors, says Polanyi, never before had these been placed at the centre of human action: 'The mechanism which the motive of gain set in motion was comparable in effectiveness only to the most violent outburst of religious fervour in history' (Polanyi 1944: 30). Therefore, when catastrophe hits society as a result of attempting to impose the self-regulating market, society in turn launches a counter-movement to protect itself. Such a counter-movement can emerge either from the top down or from the bottom up, from the state itself or from one or more of the subordinate groups or classes in society. Protection initiated from the top tends to result in paternalistic or statist and authoritarian solutions that are ultimately degrading for subordinate groups and classes (ibid.: 99). In contrast, protective movements coming from the bottom up invigorate society and are therefore more sustainable in the long run.

A prevalent myth that Polanyi debunks is that, far from minimizing or reducing state intervention in the economy, the self-regulating market requires intervention to create markets and sustain them (de la Garza Toledo, this volume). This is a critical point; for one of the main ideological claims of neoliberal globalism is that the state should stay out of the economy to save taxpayers' money and spur private initiative. But Polanyi thinks that interventionism hardly diminishes (Polanyi 1944: 66, 140). Furthermore, the emergence of national markets was in no way the result of the gradual and spontaneous emancipation of the economic sphere from governmental control. On the contrary, says Polanyi, 'the market has been the outcome of a conscious and often violent intervention on the part of government which imposed the market organization on society for non-economic ends' (ibid.: 250).

The basic characteristic of the Industrial Revolution, then, is the establishment of the capitalist market economy. All other factors are incidental: the rise of factory towns, the emergence of slums, long hours of child labour, the low wages of some categories of workers, the increase in population rate; and the concentration of industries. In agricultural society, the transformation involves a change in the motive of action: 'For the motive of subsistence that of gain must be substituted' (ibid.: 41). This is a central drive that the Fox administration wants to promote in Mexico's countryside, with dreadful consequences: 25 million people live in the countryside and most are being negatively affected (Bartra, this volume; Cohen, this volume).

Polanyi tells us how, against the Physiocrats, Adam Smith asserted from the start of classical political economy that not geography or nature but the skill of labour and the proportion between the useful and the idle members in society are what explain the wealth of nations. More importantly, 'wealth was to him merely an aspect of the life of the community, to the purposes of which it remained subordinate' (Polanyi 1944: 111). From this humanist perspective of Adam Smith's, however, the utilitarian philosophers such as J. Bentham would adopt a 'naturalist' approach to forcing workers to sell their labour-power by the sheer force or compulsion of hunger: 'Poverty was Nature surviving in society; its physical sanction was hunger' (ibid.: 117).

For Bentham, there was no contradiction between the simultaneous existence of prosperity and poverty: 'In the highest stage of social prosperity,' he said, 'the great mass of the citizens will most probably possess few other resources than their daily labor, and consequently will always be near indigence' (cited in ibid.: 117). Later on, Polanyi criticizes classical political economists for focusing just on the penalty of starvation as the only way to create a labour market. He wonders about the inexplicable omission of discussing the possibility of the allurement of high wages to achieve the same goal of a functioning labour market (ibid.: 164).

Of local, external and internal (or domestic) trade, only internal trade tends to be based on the principle of competition, says Polanyi. Local and external trade may be based primarily on complementarities (ibid.: 60). This was the case in the national phase of capitalism. But now that it has moved to the global stage, one of the main things that neoliberal globalism is trying to achieve is, precisely, to extend the principle of competition to the global sphere, regardless of the fact that many diverse standards prevail in the different societies that are being integrated.

Now, why is the self-regulating market so destructive of society's foundation? Let us start with a definition of the central concept: a self-regulating market is said to exist when an economic system is controlled, regulated and directed by markets alone. The neoliberal expectation is that 'human beings behave in such a way as to achieve maximum money gains'. Furthermore: 'Order in the production and distribution of goods is ensured by prices alone.' State policy is not to interfere with prices, supply or demand; policies exist only to help insure the self-regulation of the market (ibid.: 68–9). The self-regulating market requires institutional separation of society into an economic and a political sphere. Hence, 'a market economy can exist only in a market society' (ibid.: 71). Here's why: launching labour, land and money into the market implies that the substance of society itself (i.e. humans, nature and the organization of production) will become subordinated to the main dynamic mechanism of the market: profit-seeking.

This is the crux in Polanyi's theory: that the establishment of a self-regulating market involves creating fictitious commodities out of labour, land and money. The problem for him is as follows: while genuine commodities are empirically defined as objects produced for sale on the market, in the sale of labour-power humans must go with it, suffering all the consequences. A similar thing occurs with land, another term for nature: when it becomes commodified, the conditions are ripe for environmental destruction (see Carlsen, this volume). Thus, while labour, land and money markets are essential for a market economy, no society could stand the effects of such a system of crude fictions, says Polanyi, 'unless its human and natural substance as well as its business organization was protected against the ravages of this satanic mill' (Polanyi 1944: 73). Polanyi's thesis is that leaving these aspects of society (humans, nature and productive organization) to the whims of the market 'would be tantamount to annihilating them' (ibid.: 131).

The counter-movement of society consists in checking the action of the market in respect to the factors of production though interventionism of some sort. In the case of England, the landed aristocracy and the peasantry tried to defend the land, while the labouring people, to a smaller or greater extent, 'became the representatives of the common human interests that had become homeless' (ibid.: 133). On this aspect, Polanyi seems to agree with Marx that the proletariat represents the universal interests in human emancipation.

Society's protective movements emerge specifically in view of three points of attack: (i) when the competitive labour market hits the bearer of labour power, namely the worker; (ii) when international free trade becomes a threat to the largest industry dependent upon nature, namely agriculture; and (iii) when the movement of prices and exchange rates imperil the productive organizations that may have become heavily indebted to keep functioning. Remarkably, these three points all seem to be present in Mexico today: a significant portion of workers is unified around the recently organized National Union of Workers (Unión Nacional de Trabajadores, UNT), which is rallying side by side with teachers and peasants in protest of NAFTA (see chapters by Bartra, de la Garza Toledo and González below). Thus, both labour and land concerns are fighting in unison. If we take into account the constituency of El Barzón, which includes small and middle-sized agricultural entrepreneurs and small- to medium-sized creditors in the cities, then we might see that indebtedness (money, prices and so on) is also wreaking havoc in the realm of productive organization. This leaves only the large corporations in Mexico, both domestic and transnational, which are among the few beneficiaries of the neoliberal model of economic globalization.

Gramsci and the theory of political class formation (PCF)

If Polanyi gives us a good grounding for conceptually understanding the changes in the economy, we need a political theory to understand how subordinate groups, classes and communities in society become organized to mount a protective counter-movement to the onslaught of neoliberal globalism. In the context of an emerging liberal democracy, such mobilization is located in the realm of civil society. Now, when it comes to the strengthening of civil society vis-à-vis the state, Antonio Gramsci is one of the classic theorists of the twentieth century that provides the very best insights for a theoretical understanding of the process. Based on some of his concepts and my own previous work, in this section I offer a synthesis of the theory of political class formation (PCF). This is a process by which civil society becomes strengthened within semi-authoritarian or weak liberal-democratic regimes (Otero 1999; Otero and Jugenitz 2003; Otero, this volume). Although this theory is phrased in terms of the political formation of social classes, it is equally applicable to groups and communities (Cohen, this volume; Martínez-Torres, this volume).

Let us begin with Gramsci's expanded definition of the democratic state. Rather than restricting his definition to juridical and political structures, Gramsci usually refers to the state as the sum of 'political society', or the realm of domination, plus 'civil society', or the realm of hegemony The less democratic a state, the more it relies on domination or force. Conversely, the more democratic a state, the more it relies on hegemony, or the consent of its people: democracy, says Gramsci, 'must mean that every "citizen" can "govern" and that society places him, even if only abstractly, in a general condition to achieve this. Political democracy tends towards a coincidence of rulers and the ruled' (Gramsci 1971: 40).

Within this conception of radical democracy and the state, a further central question becomes: how can subordinate groups or classes become hegemonic or dominant, or at least gain the ability to push for state interventions in their favour? For Gramsci, answering this question regarding subaltern classes requires the identification of two phases, which are part of what I call political class formation: first, 'autonomy vis-à-vis the enemies they had to defeat'; and second, 'support from the groups which actively or passively assisted them' in their struggles (ibid.: 53). A third point posited elsewhere by Gramsci deals with the nature of leadership: lest it be democratic and accountable to its social constituency, demoralization and cooptation may be the result. Too often, the character of leadership does not depend on the leaders themselves, but on the state's action. As Gramsci puts it: '[b]etween consent and force stands corruption/fraud ... This consists in procuring the demoralization and paralysis of the antagonist (or antagonists) by buying its leaders ... in order to sow disarray and confusion in its ranks' (ibid.: 80 fn).

Political formation, then, is the process through which direct producers and other social groups shape demands, form organizations to pursue them, and generate a leadership to represent them before the state and other organizations with which alliances are built. PCF theory is clearly located in a post-Cold War era, one in which the struggle for socialism through violent revolutionary means is essentially over. The struggle for democratic socialism must be waged by expanding liberal-democratic structures and building a new hegemonic project around human needs and environmental sustainability (Angus 2001). In the context of neoliberal globalism, the question becomes: how can subordinate groups and classes organize to advance their demands without becoming coopted into bourgeois-hegemonic discourse?

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Excerpted from Mexico in Transition by Gerardo Otero. Copyright © 2004 Gerardo Otero. Excerpted by permission of Fernwood Publishing and Zed Books Ltd.
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