The State as Banker and Entrepreneur: The Last-Resort Character of the Mexican State's Economic Intervention, 1917-76

Abstract

There is a growing body of evidence to demonstrate that the state that was consolidated in the wake of the Revolution deliberately created and has continued to nurture a national bourgeoisie which has been a major force in the spectacular economic growth (the Mexican miracle) of the past four decades, growth that has had little or no benefit for-indeed some argue was built on the backs of-the lower classes.' And yet, paradoxically, the capitalists that have so benefited rarely view the activities of the state with more than suspicion, and often portray it as their principal enemy--or perhaps not so surprisingly. Hardly limiting itself to mere infrastructure investments or the provision of investment incentives, the state has itself emerged as the major banker and entrepreneur in the economy. Its own enterprises have preempted private-sector savings to finance public investment; they have closed off opportunities for private investment; and they enjoy special advantages in sectors where public and private forms compete. Even in comparison with other major Latin American countries, the state has been atypically and forcefully interventionist in its national economy, particularly with regard to the scope of its involvement in the manufacturing sector.2 These two seemingly opposed views of the state are both factually accurate and reconcilable under the following thesis: Following on the Revolution, the state came to take on the role of making capitalism work for Mexico, and, in the context of Mexico's being a dependent, late-starting industrializer, this task required, for any degree of success, both major restrictions on the demands of the lower classes and the forceful entry of the state into areas of the economy where the private sector was unwilling or unable to enter, or had entered and failed. The central question of this article addresses part of this thesis: Why has the state emerged as the major banker and entrepreneur in Mexico's economy?3