The 1980s Mexican Political Economy
Reinterpreted through the Hypothesis of Financialization
Violeta Rodríguez*
Date submitted: August 9, 2011. Date accepted: December 2, 2011

This paper presents the analytical and statistical evidence that supports the hypothesis that the economic policy implemented by the Mexican government in the 1980s aided the financialization process that by then had already established itself in Mexico. It examines the evolution of this policy toward a more advanced phase, in a favorable climate for achieving, and indeed increasing, financial profits.

For this purpose, I define the term financialization as a pattern of accumulation in which replaced that which held sway during the industrial capitalist era,1 following the process shown in the diagram above.2 I agree with the argument that this process had an external original, because Mexico's financial system was a late-developer3 and took place with the government's active participation and financial backing.

I specifically base my argument on the hypothesis that Mexican financialization began in the 1970s,4 when the government made use of secondary reserves to tackle the exchange-rate instability of the period. The resources from these secondary reserves came from external loans that constituted the first set of financialized economic investments received by Mexico; they were placed in the main business sector for this type of economic areadebtwith the prospect of appreciating in value through a simple push of financial indicators, which were externally sourced since Mexico's financial system was still under-developed at the time.

Based on the fact that in the early 1980s Mexican financialization was at its distributional conflict stage, I propose the hypothesis that the neoliberal and globalizing policy of the decade gave the impetus for financialization to reach the next level, the stage of leveraged buy-outs. And it achieved this by guaranteeing that the domestic economy would comply with the following two determinants for this progress:5 on the one hand, defining the valuation of financial capital based on automatically defined domestic reference points, and on the other, laying the foundations for the permanent expansion of the value and yield from debt-based financial operations.

* Researcher at the Economic Research Institute, National Autonomous University of Mexico (Universidad Nacional Autónoma de México, Instituto de Investigaciones EconómicasUNAM-IIEc). Email: violetta@unam.mx

1 As defined by Krippner, 2005: 174.

2 This takes the stages-of-development approach used by Palley (2009) for the US and adapts it to Mexico. The years cited, however, are not proposed as strict limits (they can differ by indicator and measure of economic policy), and are only specified in reference to an approximate average of each stage.

3 Levy, 2011: 16.

4 Rodríguez (2011) provides the basis of this hypothesis.

5 These determinants made it possible to lessen the financial yields’ dependency in regard the government's intermediary role and financing, as a sign of the search for the autonomy of financial capital as referred to by Chenais, 2003: 45-46.