A farewell to urban/rural bias: peripheral finance capitalism in Mexico

Abstract

Based on a discussion of the structural transformation of the Mexican economy, this paper investigates the impact of financialization on agriculture’s role in capitalist development. It argues that the peripheral financialized economy is a rural–urban economy. On the one hand, agriculture and industry are bifurcated into a growing export sector and a stagnating local economy, and there are no functional ‘developmental’ links between capitalist agriculture and industry. On the other hand, the economic structures have resulted in the consolidation of a huge mass of rural–urban ‘classes of labour’. Capitalist agriculture and industry are linked through and dependent on cheap labour sustaining the export economy. I argue that the current economic formation is not due to ‘urban bias’, ‘rural bias’ or any misallocation of resources among economic sectors. Rather, it can be explained in relation to ‘finance bias’: the taking over of debt relations as the key driving force of economic activities. A major contradiction in peripheral finance capitalism arises from the financing of cheap labour through debt. This is likely to result in new financial crisis, when the contradictions between increasing levels of (private and public) debt, a stagnating domestic economy, and below-subsistence level wages become too large.