Volume 43, Number 169,
April-June 2012
The 1980's: Mexican Political Economy
Reinterpreted through the Hypothesis of Financialization
Violeta Rodríguez

To complement the above point, I propose the hypothesis that in the 1990's,6 with the complete opening up of the domestic economy and foreignization of banks, the economic policy elevated that performance to an international standard; furthermore, with the reform of the country's pension systems, the policy converted these pension system's funds into the most sizeable working capital for said debt operations,7 thus ensuring the operations and its yields, a domestic and private source of demand and payments.

The paper is divided into two sections. The first section describes the descriptive statistic of the balance and interests of Mexican debt,8 to show how the debt's stock and its cost started to grow and became the one of positive slope trend that is nowadays until the country began the process of financialization, and not before. The second categorizes Mexico's macroeconomic political steps taken in the period in question, based on their role in the evolution of the process until it reached the stage of leveraged buy-outs Capitalism. The conclusions propose that the aforementioned policy paved the way this evolution, since it laid the ground for Mexican financialization to reach its third stage –“consumer debt capitalism”– by the mid-1990's.

PRE-1970'S ECONOMIC POLICY AND THE PROFITABILITY
OF FINANCE OPERATIONS IN THE DOMESTIC ECONOMY

The profits of Mexico's financial sector had clearly not seen the level or growth it did attain after the country's financialization: between 1940 and 1973, the variables that defined its value–specifically the amount of debt and its interest rate–fluctuated with nominally constant trend and real trend with zero slope, in sharp contrast to the marked increases that they had since the end of the 1970's (see Figure 1).

Internal Debt

As financialization progressed in Mexico throughout the 1980's, the transactions balance9 in the private sector had deteriorated (see Figure 2) due to the lower levels of employment, salaries and non-finance profits during the period, which exceeded the reduction in personal consumption. This led to the reduction of savings in this sector to zero, and becoming negative during the 1990's, with the unprecedented growth applied by the banks to active interest rates.

This affected the stock balance (see Figure 3), the negative sum of which, in the private non-financial sector, reflected the increase of their debt–also at unprecedented levels (see Figure 4). This performance was similar to that of internal public debt in the 1980's that worst when the government intensified its monetary restriction strategy. As a result, the bank's stock balance was able to sustain a surplus throughout the 1980's and for most of the 1990's, and this actual or potential surplus was the most obvious sign of Mexico's financialization.

6 The statistical and analytic basis for this shall be covered in a later paper, since this article focuses exclusively on the 1980's.

7 Chenais, 2003: 37 and 51-54 refers to the central role of pensions systems in financialization.

8 That information, together with all the tables and figures referred to hereine, can be found in the Annex of Tables and Figures on the magazine's website: www.revistas. unam.mx

9 The transactions balance and financial assets were calculated using the methodology described by Rodríguez (2010), which is based on Goodley, W. and Cripps, F. (1983); Goodley, W. (2004) and Dos Santos, C. (2004)

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Published in Mexico, 2012-2018 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
CP 04510, México, D.F. Tel (52 55) 56 23 01 05 and (52 55) 56 24 23 39, fax (52 55) 56 23 00 97, www.probdes.iiec.unam.mx, revprode@unam.mx. Journal Editor: Moritz Cruz. Reservation of rights to exclusive use of the title: 04-2012-070613560300-203, ISSN: pending. Person responsible for the latest update of this issue: Minerva García, Circuito Maestro Mario de la Cueva s/n, Ciudad Universitaria, Coyoacán, CP 04510, México D.F., latest update: August 29th, 2018.
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