This very decade Mexico rounds off two centuries taking on its independence. It seems, however, that although the independent Mexico has experienced a number of more or less radical transformations, these changes often did more to leave things as they were than to move the nation to anything resembling a liberal constitutional order. Classical liberal ideas have always been present in Mexico in one form or another but it is paternalism, patronage, and corporatism that have deep roots in the economic thinking, not liberalism.
Today the heritage of conservative colonial paternalism is a major contender for liberalism and a source of many contemporary Mexican problems. In the pre-independence Mexico, land, and labor never really got to become commodified. The colonial society never came to be constituted by competing individuals that would see themselves as self-interested and autonomous, market exchange was impeded by the aristocratic philosophy of noble idleness, through institutions of mayorazgo or ejido that would lead to the concentration of lands, and through encomiendas and repartimientos that would weaken the position of a typical laborer. The market mechanism was misunderstood and mistrust and by the time Mexico claimed its independence the notions of bargain, contract or competition were not too relevant. The Spanish paternalism which found a fertile soil in the subsistence economy of native Americans did not permit the rise of a merchant class in Mexico. Independence was not really a break with this tradition, rather, it was a return to traditional values in a changing world shaped by Bourbon reforms, Napoleonic invasion of Iberia and partial trade liberalization. Rather than a force of emancipation, Mexican independence was a kind of counter-revolution that reinforced corporatist interests and special privileges.
Mexico did not have a stable political system until the second half of the nineteenth century when Porfirio Díaz came to power. With Díaz the political system became stable and a national (as opposed to provincial) identity begun to shape up. Stable polity is key for a liberal order, but can we find some cultural allegiance to liberal principles during the Porfiriato era? Although it might seem so looking at the records of the time, the liberal program that the Reforma movement envisioned did not change the fact that by the time Díaz came to power, ownership of land continued to be concentrated in the hands of the hacendados and that labor – the only asset of the majority of the Mexican population – was not really a property of the individual. It was compulsion, not contract that controlled labor; the liberal program was in conflict with the reality of the landed power in Mexico and the costs of enforcing the liberal ideas of the 1857 constitution were too high.
Despite the irrelevance of the liberal order that was imposed on the Restored Republic, some Mexican historians of economic thought believe we can find an allegiance to liberal principles during Porfiriato. In fact, the argument goes, at the end of the nineteenth century – during the reign of Porfirio Díaz – liberalism prevailed and later on in the 20th century this political philosophy was renewed, updated and promoted by a group of intellectuals, businessmen and politicians establishing a continuity of the so-called “orthodox liberal thinking” or “neoliberalism” that can be traced to Porfiriato. The intellectual core of this kind of thinking counts with an elite that reforms the state with one principal objective: creating and strengthening the market; the government should bring about conditions under which the price mechanism functions correctly.
Granted, the 1883 commercial code defined the profession of a merchant, the civil code (1867-1884) exalted contractual arrangements for labor, all significant private law limitations on free commerce were abolished by legislature, in 1889 shareholder-owned corporations were permitted separating management from ownership, in 1896 alcabalas were mostly abolished and the value of Mexican industrial product doubled between 1878-1911. The fact remains, however, that bargaining for the purchase and sale of labor and goods did not prevail among large segments of Mexican population; the civil law did not provide a solid and inclusive framework for economic activity and the life outside of the cities was largely unaffected by the commercial and legal innovations of Porfiriato. Rather than private economic agents, it was the government that through institutions of fomento directed the country development. The development strategy of the Porfirian government was not liberal, rather, the strategy rehabilitated the Spanish mercantilist colonial tradition introducing a kind of economic nationalism spurring what could be called a closed door defensive modernization. Porfirio Díaz created a patronage pact that sustained the political establishment and protected powerful economic interests. This pact brought stable polity and modernization but not economic liberalism.
In many ways, the Mexican Revolution was a break with the Porfirian tradition but in many key aspects the movement brought about changes that made it possible to keep things as they were yet again. The Mexican Revolution was violent but most importantly it was conservative, it embodied the key ideas of Spanish economic paternalism: limiting the scope of avarice and bringing about social justice to protect the weak and poor from exploitation by private economic power. To achieve these goals, the constitution of 1917 (mainly through articles 27 and 28) rolled back traditional patterns of community ownership and weakened the development of market relations. With the formation of Partido Revolucionario Institucional (PRI) in 1946, the patronage pact introduced by Porfirio Díaz reemerged, the chief mechanism for allocating factors of production was still government coordination, not price mechanism.
The reforms of the 1980s – what some call the “second revolution” – did not modify the key institutions of Mexican Revolution either. The article 27 of Mexican Constitution stayed in place and the article 28 was amended to give the government power over key industries and the mandate to intervene so as to make sure markets are competitive. The “second revolution” of the 1980s and 1990s did remove some inefficiencies through privatization and partial liberalization of trade, it helped move the Mexican economy to the production possibility frontier. But the very frontier did not move outwards because the “second revolution” did not manage to strengthen the rule of law. The “second revolution” was again a predominantly conservative movement that firmly reified the rectorship (rectoría) of the Mexican government. Since the 1980s and despite the reforms the development has been lackluster, in large parts of the country poverty rates have not diminished and corruption, violence, and impunity are still major problems.
The argument about deep roots of liberal orthodoxy in Mexico is important, it tries to establish a link between the nineteenth century and the immediately present Mexican reality that is characterized by crony capitalism, patronage pacts, inequality and faltering social mobility. As I argue elsewhere, the thesis that links the Porfirian development strategy with the 20th-century Mexican liberal thinkers downplays the very prominence of economic nationalism during the Porfiriato era and the prominence of mercantilist arrangements that have survived and prevailed in Mexico since the 1980s. Liberalism has always been present in the history of Mexican thought. But it makes no sense to call the Mexican “orthodoxy” liberal, it is corporatist and contradictory to classical liberalism.
A Spanish version of this article was published in the Boletín de la Asociación Mexicana de la Historia Económica 11, 2. May-Aug, 2016