Volume 46 Number 180,
January - March 2015

Morales, Josefina (compiler) (2014), The Financial Crisis in Mexico and the World 1971-1997. Anthology, O. Sarahí Ángeles Cornejo, Institute of Economic Research - UNAM, Mexico.

In addition to being interesting, this book is also extremely useful, because it encompasses such a broad range of topics. Although these themes were initially raised between the 1970s and 1990s, they are now more relevant than ever, in an environment in which there is no end in sight to the economic and financial crisis that broke out in 2008, and the hegemony of the United States continues, bolstered by, among other factors, its military power and the primacy of the dollar in the international monetary system, a system that the author quite accurately describes as "battered."

For years, O. Sarahí Ángeles was devoted to studying and analyzing global capitalism and, specifically, Mexican capitalism. Regarding the latter, her work on the recomposition of Mexican capital and the structural changes of the national economy are exceptionally notable. Some aspects addressed in her work include: the re-privatization of the banking system, the privatization of the most important public companies, the liberalization of the national financial market and liberalization of electrical power rates and other public utilities.

On various occasions, she spoke vehemently of the drastic deterioration in living conditions for the population, due to, among various factors, the conversion of Mexican labor into some of the cheapest in the world.

Her analysis of the Altos Hornos case and the North American Free Trade Agreement deserves special mention. According to the author, this was the culmination of the neoliberal restructuring to which the Mexican economy was subjected. And no description would be complete without mention of the topic of oil, which caught her attention in later years. Sarahí Ángeles had long warned that speculation in the oil futures market would significantly affect fluctuations in oil prices. She also described how these price movements are correlated with share prices and, the majority of the time, inversely correlated with the value of the dollar and euro.

With that brief overview of the first works included in the anthology, I now want to focus on her undergraduate thesis, entitled "The Genesis of Money and the International Monetary Crisis" (1981), in which she explains the events that took place since the Great Depression (1929-1933), ascertaining that in imperialist countries, the crisis grew to a magnitude that severely damaged the economic and political circumstances of its working class, a phenomenon that was especially harsh in underdeveloped countries and colonies.

After her detailed and meticulous analysis of the Great Depression, she turned her attention to the process leading up to the Bretton Woods Agreement, the rise of the United States to a capitalist hegemonic power, the emergence and development of problems in the dollar exchange scheme and the consequent worsening of the overall crisis of capitalism. She pays special mind to the fact that when the Second World War came to an end, the United States imposed plans, policies and institutions on the world to reorganize the functioning of capitalism and consolidate its hegemony. The United States effectively made use of its own power and that of institutions such as the International Monetary Fund, the International Bank for Reconstruction and Development and the General Agreement on Tariffs and Trade to benefit financial capital and intensify its aggression against socialism, one palpable example of which was the Korean War.

I would like to cite a few paragraphs of her thesis that seemed especially relevant to me: "The economic crisis that has afflicted the capitalist system since the 1960s is a key factor in the international monetary crisis that began at the end of the 1960s and continues up through to the present day" (p. 303). I mentioned that this work was written in 1981, but the present to which she refers has been extended and further aggravated in our age. Proof of this is that, later on, she warns that "the growing over-accumulation of capital is pushing the earnings rate of the productive sector down; the surplus capital masses are going to non-productive and weapons sectors, and, especially, to speculation." This could just as easily have been written today.

She also states that the monetary crisis of capitalism has led to the constant devaluation of the currencies of underdeveloped countries. The fact that these countries depend on the imperialist metropolises means they have had to follow the devaluation of currencies in these imperialist countries and, moreover, face subsequent devaluations due to the combined effect of the global capitalist crisis and their own internal crises. Underdeveloped countries have been forced to transfer a greater portion of the surplus produced by their workers to imperialist countries due to these continuous devaluations. The debt of underdeveloped countries is only comparable with the amounts that capitalist nations dedicate to direct military spending.

In summary, the author describes an international monetary system practically designed for the expansion of financial capital, based on the transfer of the wealth of other countries to the United States, a situation that is highly exploitative of underdeveloped and dependent countries.

The proposals made by Sarahí Ángeles might lead us to think that the economic and financial crisis of 2008 was inevitable, given the deficiencies of the international monetary system since 1971. In 1968, 1.3 trillion dollars in credit was backed by 10 billion dollars in gold. As long as gold was money, the creation of credit was limited by its supply. When the United States abandoned the gold exchange standard, it eliminated all restrictions on how much credit could be created. Over the next four decades, no more gold was added to the base, but 50 trillion dollars in credit were created.

The current Great Recession and the Great Depression were caused by economic booms built on credit. In both cases, the boom began when the link between gold and money was broken. The former event took place in 1914 when, as the author saws, the First Gold War destroyed the gold standard. The asymmetrical nature of the international monetary and financial systems, on top of globalization, led to the outbreak of the 2008 crisis, which soon spread to countries that had no relation whatsoever to the institutions that had caused it.

Without a doubt, any reader who is truly interested in learning about the current state of global monetary and financial affairs will find a kindred spirit in this author and gain a better understanding of her by reading the texts included in this anthology.

Alma Chapoy
Institute of Economic Research – unam

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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,
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