Re: Henwood: Collapse in Cancun

["Julio Huato" <juliohuato@xxxxxxxxxxx>]

David Schanoes wrote:

> The problem?  Just look at NAFTA's impact on Mexico and Mexican
> agriculture.  And believe me, every Marxist on any side of any border
> should have opposed NAFTA for its impact on the poor.

Mexico's agriculture was utterly ruined before NAFTA.  If anything, under
NAFTA, it may be enjoying a timid resurgence.  Recent employment statistics
even hint of a slight repopulation of the country side in the late 1990s.

Mexico's agriculture was ruined mainly by the industrialization strategy
followed since the 1940s but with particular emphasis in the 1970s and
1980s: *import substitution*.  Import substitution meant protection of
domestic manufacturing.  In other words, Mexican farmers had to buy low
quality manufactured inputs at artificially high prices.  On the other hand,
in order to subsidize urban manufacturing, the government administered the
prices of farm goods, especially, corn -- the staple of Mexican workers'
diet.  The prices of farm goods were kept artificially low.  Agriculture was
squeezed between high prices/low quality of inputs, low prices of output,
high taxes, and low transfers.  Only a small segment of modern capitalist
farming that enjoyed exceptionally good advantages remained prosperous.

Yes, the government did pass small measures to boost agriculture (a rural
bank here, a marketing network there, etc.), but overall they were pretty
ineffective and the money made the fortunes of many an agri-bureaucrat.
During the 1930s-1950s, Mexico exported cereals to the U.S.  That flipped
due to circumstances in the world market worsened by import substitution.
When it became obvious that agriculture was in trouble, the government
tightened the import licenses on grains.  But in *net terms* Mexico's
agriculture always lost much more than it gained.

Traditional farming, in the areas where most land tenure is semi-collective,
was devastated.  No doubt, any other path of capitalist development in
Mexico would have massively displaced peasants out of the countryside
anyway, but perhaps not as suddenly as it happened.  Agricultural
productivity would have had to keep pace with the rest of the economy.  It
didn't happen that way.  A strategy aimed to build an industrial elite
closely intertwined with the PRI plus the political subjugation of the
countryside to the PRI ruined Mexico's agriculture for decades.  This is
what underlies the vast rural poverty, the massive migratory waves to big
cities and the U.S., the abysmal levels of income inequality, the urban
unemployment problem, the size of the informal sector, the
ultra-segmentation of the working class, and a host of other social ills in
Mexico.

If we assess what happened during the 1960s, 1970s, and 1980s, the dangers
of farm liberalization on today's Mexico are small in comparison.  Back in
the 1950s, *most* of Mexico's labor force was in the country side and a
large percentage was campesinos (ejidatarios and small landowners).  In
today's Mexico, only 1/4 of the labor force is there, and a very small
percentage is campesinos.  Most are wage workers with no land or small plots
of land that don't lend themselves to serious modern exploitation.  That
means that their main needs and interests are not necessarily to sustain
higher prices for farm goods at public expense (i.e., at the expense of
workers).

Statistics, studies, and my own personal observations indicate that the main
income sources of poor rural dwellers in Mexico are by far wages and
remissions (i.e., the wages of their relatives in the cities and the U.S.)
-- not farm revenues.  Their small farm units contribute only a tiny (and
declining) share of their income.  Studies also show that lower farm prices
actually *help* the poorest rural dwellers (mostly women, children, and the
elderly) because they lower the cost of food.  Aside from a portion of the
Left, the old guard of the PRI, and anti-globalization students, the bulk of
the opposition to the WTO and NAFTA in Mexico comes from organizations such
as "El Barzón," which are made up by middle-income and rich farmers and
intermediaries from the northern part of Mexico.  Most of the protection
that they demand would mean money in their pockets.  They are not the main
political enemy of Mexico's workers nowadays, but we shouldn't conflate
their interests with those of the workers.  These farmers are the ones who
would be able to capitalize were the U.S. to eliminate farm subsidies,
quotas, etc.  The working poor would only benefit indirectly -- hopefully
there'd be more jobs for them in the modern farm areas of the North.  IMO,
in today's Mexico, public policies aimed to assist the rural poor need to
focus on jobs, health, education, and infrastructure.

Even without NAFTA, Mexico would have had to lower the protection of its
agriculture.  This was a requirement imposed by the GATT rounds leading to
the WTO.  Mexico joined the GATT almost ten years before NAFTA.  In fact,
NAFTA's original agricultural provisions were not as bad for Mexico.  The
original provisions resulted from the pressures of U.S. farmers to leave
their interests alone, and the Mexican negotiators managed to reciprocate.
However, during the 1994-1995 peso crisis, Clinton (and junk food
manufacturers) used the bailout to persuade Zedillo to accept a flood of
U.S. corn, corn syrup, and other stuffs.  Corn producers are politically
weak in Mexico and little opposition to Zedillo's decision came out of them.
 However, the better organized workers at the sugar mills mounted a more
effective protest during the first year of the Fox administration and the
government partially reversed course.  By then the Mexican economy was in
recovery.  But no regular NAFTA provision forced Mexico to accept this corn.
 It was a discretionary policy under the pressure of the peso crisis.

And the peso crisis was not the result of NAFTA.  In the summer of 1994, the
government went into a spending binge to ensure the election of the PRI
presidential candidate, Ernesto Zedillo.  The government refused to let the
peso adjust because it needed to counter ?- or avoid worsening -- the
financial disturbance generated by the Zapatista uprising and high-profile
political assassinations.  But once Zedillo got elected, the imbalances
exploded.  After the Treasury-IMF bailout, the economy recovered briskly and
paid back the U.S. Treasury faster than expected.

The impact of NAFTA and -- more generally -- of the 1983-1990s economic
reforms on the poor or on Mexico's agriculture is *not* as clearly negative
as people on this list may think.  To give yourself an idea, just compare
Mexico's economic performance (and the situation of the working class)
during the 1990s with that in the 1980s and with that of similar Latin
American countries in the 1990s.

I'll leave it at that.

Julio

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