Mexico's Economic Dilemma: The Developmental Failure of Neoliberalism - by Cypher, James M. and Delgado Wise, Raúl

Abstract

Cypher, James M. and Delgado Wise, Raúl (2010) Mexico's Economic Dilemma: The Developmental Failure of Neoliberalism, Rowman and Littlefield (Lanham, MA), xi + 236 pp. £21.95 pbk. Since the 1980s neoliberal policies have realigned Mexico's political economy giving more power to capital while weakening the regulatory state and leaving millions impoverished. Despite popular opposition and widespread social dislocation, the Mexican government continues to deepen market-based policies. In Mexico's Economic Dilemma, James Cypher and Raúl Delgado Wise empirically examine the impact of neoliberalism on Mexican development. They argue that since the 1980s Mexico has been ‘locked into a situation of adverse path dependence’ (p. vii) that has exacerbated the asymmetric relationship with the United States and within Mexico. Cypher and Delgado Wise challenge orthodox approaches to the Mexican economy. Arguing that economic theory devoid of context and history tells us little, they employ an integrated interdisciplinary lens to connect political economy, labour migration and Mexico's domestic economy. Mining diverse sources, including official publications, newspapers, interviews with policy makers and their own surveys and databases, they detail how the export-led model detrimentally impacts the national economy and workers, forcing a growing army of Mexicans to sell their labour cheaply in Mexico and United States. In the first three chapters, the authors re-examine Mexico's post 1980s political economic structure focusing on the export strategy that undergirds the Mexican model. They emphasise how it has created a fragile economy plagued by persistent crises. This fragility however, has benefited corporate Mexico, allowing it to consolidate markets, expand internationally and reap skyrocketing profits. Consequently, the authors argue ‘the existing economic strategy is carrying the nation to higher and higher levels of disarticulation, stagnation and migration’ (p. 1). Cypher and Delgado Wise critically reexamine Mexico's Import Substitution Industrialisation (ISI) from 1940 to the 1970s. They underscore the accomplishments of ISI: the creation of government firms to fulfil crucial social functions; the maintenance of an adequate level of employment; the stimulation of private sector development; and government action in areas abandoned by private capital. They demonstrate that ISI was not exhausted but instead was in need of an overhaul as many Asian nations were able to do. The rejection of ISI can be better understood as the product of an ideological shift and not the failure of an economic model. Cypher and Delgado Wise then hone in on the ‘building block of the export-led model,’ the maquiladora sector, in Chapters 4 and 5. They argue that the maquiladora programme, even at its height, is not a national development strategy since ‘it does not represent the exportation of Mexican manufactured products; rather it represents the export of Mexican labor embodied in the final assembled and exported products (pp. 82–83)’. This is also true for ‘the disguised maquila sector’ – industry that operates like maquiladoras but are not registered as such. Disentangling government statistics, they show that the neoliberal imperative for rapid industrial exports through the expansion of maquiladoras was at the expense of Mexico's endogenous industry. Mexico's Economic Dilemma links the analysis of the export-led strategy to Mexico's massive migration to the United States. The exportation of labour is crucial to the economic model since migrant remittances are deemed an important source of national income. However, in a telling calculation, they challenge the assumptions about remittances by comparing them to their estimates of the social and reproduction costs that Mexico transfers to the United States. They find that, ‘labor migration saves the United States considerable social expenditures, since educational and social welfare costs are paid for by Mexico’ (p. 155). Between 1994 and 2008, Mexico transferred $83 billion dollars (2008 prices) to its northern neighbour, while remittances accounted for only 30 percent of that amount. Hence, Mexico is subsidising a significant portion of the US labour force, as its workers are socially excluded and work and live under exploitative and precarious conditions. The authors conclude that only through an inclusive national development strategy is a just economic development possible. This would require the development of vibrant transnational labour and social movements to move policy in both countries since the economies are intricately and unequally intertwined. The authors realise that such movements do not appear to be on the horizon, however with the country's growing polarisation and increased social dislocation it is difficult to predict what actually may occur. Mexico's Economic Dilemma is a prodigiously researched clarion call to rethink Mexico exclusive economic model. Cypher and Delgado Wise demonstrate what transnational research and collaboration can accomplish. The book should be read and debated widely by all of those interested in understanding the impact of the globalisation process in general and in Mexico specifically.