Populism in Mexico: From Cardenas to Cuauhtémoc
Jorge Basurto
"Populism in Latin America"
Edited by Michael L. Conniff
1999
ISBN 0817309705

At its very core, Mexican populism addressed the needs of the people, mainly the poorest classes. Populist policies made the masses winners in the political game, rather than losers. Populists provided more opportunities for the masses to improve their lives. Unlike the neo-liberals who govern Mexico today, populists spoke for government action to achieve a more equitable distribution of wealth. Populism in Mexico resembled European social democracy and the U.S. concept of the welfare state.

Mexican populism also contained nationalism and corporatism. The former meant promoting economic development using mainly Mexican capital. The latter entailed efforts by the government to build up labor, farmer, middle class, and even business associations and to integrate them into the state itself, or rather to be intermediary between the rank and file and the leaders.

Mexico's most celebrated populists were Gen. Lázaro Cárdenas and Luis Echeverría (presidents, respectively, 1934-40 and 1970-76). If we take into account the positive aspects of populism, Cárdenas's son Cuauhtémoc, leader of the opposition and twice a presidential candidate, might be regarded a neo-populist in contemporary Mexico.

CARDENISMO

Lázaro Cárdenas, Mexico's leading populist, was born in 1895 in a small town in Michoacán into a middle-class family. Cárdenas was a man with an active, versatile mind. He finished primary school and then worked at odd jobs. In 1910-11 he edited a newspaper that supported the presidential candidacy of Francisco I. Madero. Because he sympathized with the revolutionaries, he joined Emiliano Zapata's army in 1913 at the age of eighteen. Later he transferred to other units, ending up under the command of future President Plutarco Elías Calles (1920-28). Cárdenas remained loyal to Calles during the so-called Maximato (after Calles's title of Jefe Máximo) of the early 1930s, when the latter ruled through puppet presidents.

Cárdenas's loyalty earned him an appointment as candidate and afterward governor of his native state (1928), and then he served as head of the revolutionary party and minister of interior. In 1933 he became war minister, the top post to which a general could aspire. He was clearly a rising power and good politician with civilian instincts and an inclination toward leftist programs.

Cárdenas handled the 1934 succession expertly, winning the official nomination without serious challenge and forcing Calles to give his blessings as well. Cárdenas had cultivated the support of peasant farmer associations and had allied with organized labor. He had also earned the backing of junior officers and army troops. Calles accepted Cárdenas, secure in the belief that he would continue to rule Mexico from behind the scenes.

Cárdenas convened party delegates in early 1934 in order to work up a platform for the campaign. Taking his cue from the multiyear Soviet planners, Cárdenas orchestrated passage of the six-year plan (Plan Sexenal). His program stressed labor and land, and he was assured of Calles's support and that of the official party. Using the election campaign to build a mass following, Cárdenas traveled sixteen thousand miles and visited all the states. Everywhere he went he spoke with the local chieftain, met the army garrison commander, and held audiences with the townspeople. He regularly held hours in town plazas, where peasants and workers could sit on park benches and speak with him.

Because he always protected and helped Indians, they gave him the nickname "Tata" Lázaro, or Father Lázaro in Michoacán. His victory in 1934 was one of the most peaceful in years. He was a very popular man when he assumed the presidential sash in December 1934. Even after his election he continued to tour the country to meet with the people.

Cárdenas gradually signaled that he would not serve as a puppet under Calles. He ordered the federal police to crack down on gambling and prostitution, which hurt some prominent generals. He reduced his own salary by half and refused to live in the Chapultepec presidential palace.

From the very beginning, Cárdenas announced his intention of carrying out the land and labor reforms of the party's Plan Sexenal. He also said he would lend official backing to agrarian and workers unions in view of his need to support his whole reform program. Cárdenas openly associated with well-known leftists Francisco Mújica and Vicente Lombardo Toledano. This raised the level of political tension because right-wing groups, like the fascistic Gold Shirts, often clashed in the streets with their leftist counterparts.

Calles, who was in Los Angeles for medical treatment, returned to Mexico in May 1935 and denounced Cárdenas's initiatives, which he termed a "marathon of radicalism". The President had anticipated such a reaction however, and had cultivated support among army officers and soldiers. He forced Calles into exile and then systematically fired hundreds of conspirators from the ranks of government and the army; they were defeated and banned from the political scene.

Cárdenas had become enormously popular for standing up to Calles and championing land and labor reforms. With the political threat of a coup removed, Cárdenas proceeded to make good his promises. During his term he distributed fifty million acres of land to some eight hundred thousand peasant families, more than all of his predecessors combined. He even furnished peasants with rifles in order to protect the newly acquired land from the ancient owners and caciques. The new owners were not always as efficient as the old ones, however, and they tended to consume more at home, signaling the virtual demise of the traditional power of the landowning class and the weakening of the hacienda system.

To replace the falling system, Cárdenas stimulated the spread of farms, called ejidos, some of which were worked by the community as a whole. To demonstrate how this collective farming would work, he transformed a huge expropriated hacienda on the Coahuila-Durango border into a model communal farm system, called La Laguna. Some thirty-five thousand persons, gathered into 226 ejidos, raised cotton, cereals, and other crops. Cárdenas invested a great deal of money in agricultural extension while also supporting social programs like education, rural electrification, and health. He expected the ejidatarios to begin selling their harvests in the marketplace, thereby relieving the need to import farm staples. Having the peasants enter the market economy was the main goal of the land reform.

In the beginning, La Laguna was a commercial success, but president Miguel Alemán (1946-52) considered collective ejidos socialistic, so he took away all support for this system, which resulted in a decline in farm production.

Organized labor became a solid ally of Cárdenas. Vicente Lombardo Toledano organized the Mexican Workers' and Farmers' General Confederation (CGOCM) in 1933 and enjoyed strong backing from Cárdenas. By 1935 they were close associates. In February 1936, he founded the Mexican Workers' Confederation (CTM), which claimed a million members by then and was a de facto government ally. Lombardo was a strong-willed Socialist as well as a pragmatic politician. He was incorruptible and always kept the workers' interests in mind. He knew he could count on Cárdenas to help his unions win better contracts.

Cárdenas also promoted educational expansion and reform. He favored education for the masses, based on the principle of the common good prevailing over individual advancement. Even with meager federal revenues, Cárdenas managed to increase the share that education received. He was able to build three thousand new schools and train some one hundred thousand new teachers, mostly recruited from the cities. Public school enrollment rose from 1.7 to 2.2 million during Cárdenás's term. Meanwhile, the president charged teachers with carrying out rural reforms and adult education, even in the face of much opposition in little communities across the nation. Despite these advances, the number of illiterates in Mexico actually rose due to the extremely high birthrates in rural areas.

One of the most remarkable episodes of Mexican populism occurred in 1938 when Cárdenas nationalized most of the petroleum industry. Two years before, oil field workers unions federated and joined Lombardo Toledano's CTM. Although these workers earned more than average, they suffered hardships connected with living in camps away from families and had to buy provisions in company stores. The oil companies, dominated by British and U.S. firms, refused to bargain with the unions over wages and conditions. The federation called a strike in 1937, which was sanctioned by the CTM.

After a mandatory six-month cooling off period, government mediation kicked in. The Department of Labor found in favor of the laborers, but the companies refused to settle and appealed the case to the Supreme Court. Cárdenas and other officials were already irritated with the oil companies for having shifted their plants away from Mexico in the 1920s and 1930s, largely to Venezuela. Exports had fallen from 193 to only 41 million barrels since 1921.

In early 1938 the Supreme Court reached a judgment in favor of the unions. At that point, seventeen companies (mostly foreign) wrote to Cárdenas refusing to comply with the decision. Exasperated, Cárdenas interpreted their refusal as defiance of Mexican sovereignty and immediatly expropriated the companies. He put them under a state company formed earlier to administer government-owned oil lands and contracts, Petróleos Mexicanos (PEMEX).

Expecting the U.S. government to support them against the Mexican government, the companies submitted claims of $450 million dollars, representing both existing and potential production. Cárdenas countered with an offer of $10 million, his estimate of actual capital investment. During the next two years, the companies waged a vicious campaign against Mexico and even threatened invasion. The firms boycotted Mexican crude, putting severe pressure on balance of payments. The petroleum lobby in Congress as well as the British government unsuccessfully pressured the White House to invade Mexico or boycott trade.

U.S. ambassador Josephus Daniels believed the companies had committed a grievous error in defying the Mexican Supreme Court decision. He convinced U.S. President Franklin D. Roosevelt to resist the pressure. Finally, when hemispheric defense planning in 1940 required Mexican cooperation, the Roosevelt administration set up arbitration commissions to settle the oil compensation conflict. The U.S. companies ended up receiving $24 million in 1941. Settlement with British companies took until August 1947.

Late in 1938 Cárdenas decided to restructure the official party in anticipation of a presidential succession. Renamed the Party of the Mexican Revolution, the new organization formally comprised four sectors: labor unions (the CTM), the Nacional Peasants Confederation (CNC), the army, and a miscellaneous sector made up mostly of public employees, associations, which in fact were basis populist corporatism. The newly reformed party represented a considerable share of the politically active population. The CNC counted 2.5million members, CTM claimed 1.25 million, and the military and government unions had about 55,000 each. That year soldiers were given the right to vote, which gave considerable power to junior officers who could get their recruits into voting booths.

These hierarchical units within the party ostensibly channeled information and popular demands up, but, in fact, they mostly passed orders down. No one doubted that Cárdenas commanded the party from above. He chose to support his minister of defense, Manuel Avila Camacho, a desk officer and administrator rather than field commander, for the next presidential term.

By then the president had taken sufficient measures to assure the army's loyalty, and he soundly defeated a brief rebellion. In fact, this proved that Cárdenas had succede in de-politicizing the army. Academy trained young officers who had not fought in the Revolution wore reaching command positions now and were loyal to Cárdenas and his program. The president trimmed the army's share of the federal budget from 25 to 19 percent between 1930-38. He also passed a military reorganization bill in 1939 that attempted to replace the spirit of caste among officers with a desire to serve the nation. Finally, the Military Service Law of 1939 helped diminish the gap between officers, troops, and the civilian population.

The presidential succession of 1940 proved tense but did not explode. The party delivered the votes necessary to elect Avila Camacho for the 1940-46 term. Cárdenas continued to play a role in politics until his death; he became an official voice of the past, a reminder of what the revolution had been fought for.

Cárdenas's administration led to the strengthening of Mexico's business elite, even while producing important structural reforms. After Cárdenas stepped down in 1940, the government placed a higher priority on economic growth, regardless of which sectors of the society owned capital and accumulated profits. Therefore, the process of capital accumulation and profit concentration accelerated greatly, along with the penetration of foreign capital in industry and commerce. Meanwhile, public ownership in the economy also grew rapidly, eventually accounting for about half the capital stock (especially in petroleum and electric power), yet these enterprises produced only 3 percent of manufacturing output. In effect, shortages of private funds were made up for by the government, which provided infrastructure and even low-cost inputs for private businesses, mainly petroleum. This was essentially the structure of the mixed economy that the Mexican government shaped after 1940, and it was clearly different from a purely capitalist economy.

At the same time, inequality of income distribution between labor and capital reached unusual levels in comparison with other Latin American countries. This was due to the control government exercised over the workers through bureaucratic leaders more responsive to the government than to their constituents. During the period of stabilizing development, a middle class emerged that politically received little attention, and its standards of living, although not completely satisfactory, were much better than those of the agrarian sector, especially ejidatarios, which languished.

By the mid-1960s the stabilizing development model had exhausted its potential. Members of the middle and lower strata were frustrated and protested during the student movement in 1968, which was violently repressed by the government of president Gustavo Díaz Ordaz. This constituted a crisis and opened up latent divisions within the "revolutionary family", as the government elite was called.

In 1970, Luis Echeverría, presidential candidate for the official Institutional Revolutionary Party (PRI), ran on a reform platform clearly borrowed directly from Lázaro Cárdenas-that is, populist and highly nationalist-that promised a more equitable distribution of income and a political system more responsive to the masses. With regard to capital formation, Echeverría favored domestic sources, which would reduce Mexico's reliance on foreign capital. He was not, however, hostile to outside investment. With respect to public investment, it would be sufficiently strong to direct the overall course of economic growth. Thus Echeverría promised to restore to the state its traditional role of guiding the development process. Putting this program into practice necessarily encroached on vested interests and required political classes' mobilization in Echeverría's favor. In particular he needed to build up a popular base with which to sustain his administration because the preceding presidents had destroyed the old alliance between PRI and the popular sectors. He attempted to mobilize the working class through the traditional unions and to recruit several union federations headed by discontented leaders. He also tried to rekindle in the peasantry the hope of a total agrarian reform. Finally, he sought to incorporate into the Mexican political system the middle classes, which politically had been largely forgotten since the 1940s. On another front, Echeverría envisioned general political reforms, including the democratization of the PRI, whose image had become completely discredited.

The nationalist-populist reforms of Luis Echeverría failed largely because they were founded on false premises. The chief executive believed that the presidential system conferred omnipotence on him and that his authority could be further reinforced by mass mobilization. He was especially hopeful that he could win over the financial e1ite and the more conservative elements of the bureaucracy. This had been the successful formula of Cárdenas in the 1930's. Thirty years of stabilizing development, however, had shifted the balance of power away from the presidency. In fact, economic and bureaucratic power had grown so much by 1970 that the state had lost its autonomy. The political system had become so corrupt that most politicians wore simultaneously major businessmen and millionaires.

ECONOMY AND CRISIS

In the beginning of the 1970s signs of weakness in the economy began to appear faintly. By 1972 the Mexican peso, previously a bastion of stability, began to fall in international financial markets. Echeverría's economic advisers did not wish to allow its devaluation, however, and sustained it at artificially high levels that led to an intense flight of capital and serious internal unrest. This policy encouraged imports and discouraged exports. Finally, in August 1976, it forced the first of seemingly endless series of devaluations.

The domestic economy contained other flaws, many government induced, that inhibited robust profits and high employment. Mexico's industrial plant and capital stock were obsolete and inefficient. Low productivity increased costs and turned out products incapable of competing on the international market. The foreign debt mushroomed, as did the domestic budget deficit.

In August 1982, in the last months of López Portillo's administration (1976-82), the finance secretary announced that Mexico did not have sufficient hard currency to pay service on its foreign debt and declared a moratorium for three months. The following month he announced the nationalization of all banks and adoption of exchange controls. Various factors brought about the crisis of confidence. One was the dramatic rise of international interest rates, which reached a high of 22 percent. Another was a decline in prices for raw materials Mexico exported. Together they pushed Mexico into temporary bankruptcy.

Miguel de la Madrid, who took over the presidency in December 1982, had to devote himself to practicing the politics of economic reorganization, as well as industrial conversion and moral renovation. He gave his highest priority to fulfilling international obligations, especially the foreign debt. He ordered punctual payment of both interest and capital, giving rise to-accusations that he had knuckled under to the International Monetary Fund, a multilateral watchdog. Prompt debt service, however, made it impossible to maintain a high domestic savings rate, so the economy plunged into recession. De la Madrid had to promote exports of non-petroleum products, even at the cost of internal consumption, in order to generate foreign exchange with which to service the debt. He also ended currency stabilization and let the peso float, which temporarily stimulated exports and discouraged imports.

As the 1 980s wore on, the administration began to develop a neo-liberal model that encompassed not only emergency financial recovery measures but also a broad effort to stimulate private enterprise, both national and foreign. This required the state to give up ownership of major public-sector businesses, which numbered nearly 1,155 in 1982. Privatization over the next six years reduced this number to only 502.

A powerful case was made for privatizing the public-owned businesses, which were in disastrous shape in the mid-1980s. Part of them operated at huge losses, which had to be covered out of government revenues or loans. This was due partly to setting their prices below cost so as to subsidize private industry and consumers, but they were maintained as a way of keeping jobs running. In addition, they were managed by dishonest and inefficient party hacks whom routinely diverted resources into graft that could benefit the PRI. The beneficiaries of this favoritism fought tooth and nail to protect their privileges because they were the very basis of their political power.

De la Madrid viewed inflation as an unwelcome byproduct of excessive demand. To combat it required slashing public spending, especially on such things as government jobs, education, and consumer subsidy programs. He managed to reduce public expenditures by 44 percent in his first four years. In addition, he attacked inflation by holding down salaries and wages, leading to a dramatic decrease in the general standard of living for the masses. These policies had as side effects massive numbers of bankruptcies of small- and medium-sized businesses and widespread unemployment.

De la Madrid's drastic economic policies violated the basic principles of the old populist alliance between government and the working class. The weight of the economic recovery crisis fell almost totally on the shoulders of the working and middle classes. The Mexican Workers' Confederation and the National Peasants' Confederation, central pillars of the PRI since the 1930s, were now relegated to subordinate positions in the government. They took orders from above and maintained discipline among the rank and file, without sharing the rewards they had customarily enjoyed.

The nationalization of banking led to the founding of exchange houses as substitutes for banks. Foreign currency speculation, in turn, caused a market crash in 1987 in which small and medium savers lost their profits and capital. Speculators used this capital to negotiate the purchase of the once-nationalized banks whose owners had been generously indemnified. Eventually, the government used investors' confiscated assets to pay off shareholders of the nationalized banks, a move which would have been unthinkable under the terms of classic populism.

De la Madrid clearly distanced himself from the populist measures and rhetoric of the past. The only echoes of populism heard were empty promises of responsible stewardship of the economy and general improvements in the standard of living. The actual results were minimal. The business sector did not respond to the unlimited confidence placed in them, and investments never reached earlier levels. Exports did grow rapidly, especially manufactured goods, which rose 30 percent annually between 1982 and 1985. But most of the increase was a result of decreasing exports prices, which was due to the devaluation of Mexican currency, and to worker overtime, which was caused by factory owners not investing more in plant and machinery. Indeed the profits earned by manufacturers depended mostly on reducing real salary levels. By the late 1980s Mexican workers earned only half the wages of their counterparts in Singapore and two-thirds those of Korean workers. Salaries fell from 45 percent of national income in 1982 to 34 percent in 1986.

Another negative factor in the 1980s was the continuous drop in petroleum prices on the international market, causing a loss of eight billion dollars in 1986, as compared with 1982 prices. This sum, equal to about 6 percent of GDP, meant less foreign reserves available for domestic savings. Internal borrowing on the order of 16 percent of GDP made up the difference.

In sum, the presidency of Miguel de la Madrid did not produce positive results in the economy, and therefore the general situation of the country deteriorated enormously. The middle class suffered declines in living standards, but the poor, of course, bore the brunt of the recession. Conditions were ripe, therefore, for the surge in reform sentiment that would drive neo-Cardenismo.

N E O - C A R D E N I S M O

The economic crisis of the 1980s and de la Madrid's abandonment of the classical alliance with the workers' and farmers' confederations brought into the open a latent split that had always existed in the PRI. Within the party, traditionalists led by Cuauhtémoc Cárdenas and the PML proclaimed that the popular-national-revolutionary model was still valid and should guide the party. They claimed the mantle of Mexico's most revered president, Gen. Lázaro Cárdenas. For this reason, their movement can be termed neo-Cardenismo. Reformists, on the other hand, claimed that a neo-liberal model was needed to keep up with current trends of globalization.

Neo-Cardenistas held up two principles. First, they argued for adherence to the principles of the 1910 revolution, the 1917 Constitution, and Lázaro Cárdenas. Accordingly, they criticized the economic program adopted in the 1980s as a betrayal of the Revolution. Second, they called for overhauling the PRI, which had been altered but never seriously reformed since its formation in 1929. Frozen in place during the late 1940s, the PRI had become a rigid and increasingly inflexible system of power-holding. By the 1990s it was regarded as the most serious obstacle to the development of Western-style democracy in Mexico.

As enunciated by Cuauhtemoc, neo-Cardenismo drew heavily on the ideas and actions of Mexican populism as envisioned by his father. Lázaro Cárdenas had his own conceptions concerning the guiding role of the state in the economy. He firmly believed that the state should play a determinant role as entrepreneur and planner of the economy in order to get the necessary strength to control and direct investment and therefore a more equal distribution of income. Such a strength should be used as well for the defense of self-determination, nationalism, and popular interests. He proclaimed that the problems of the country should never be left solely to the anonymous operations of the marketplace. Instead, the state should regulate them because only it "has a general interest and, for this reason, only it has a global vision". Accordingly, state intervention needed to be even greater and directed by the sociopolitical goals of the revolution.

Luis Echeverría and López Portillo upheld this interventionist position in the 1970s and early 1980s. It must be taken into account that the aim of this policy was to make up for insufficient investment by the private sector, and at the same time create or save jobs. But it led to bloated government payrolls, gross mismanagement of state-owned industries, ill-advised rescues of bankrupt businesses, and fiscal negligence and graft. In 1973 state enterprises absorbed 54 percent of federal revenues: by 1979 their share reached 70 percent.

Neo-Cardenistas agree with this policy; they think the state should provide services to the population by managing public utilities and basic industries in order to justify its strength and thereby its autonomy. This would also allow the state to exercise a stabilizing influence in the economy and uphold employment levels.

Finally, Cuauhtémoc believed that the strength of the state, as an embodiment of nation, could only be preserved by a strong president around whom all political affairs revolved. Therefore, he favored enhancing the president's authority in order to defend "a harassed country" against impositions by more powerful nations, in spite of the fact that enormous power concentrated into the hands of one person is widely criticized.

Neo-Cardenistas revived the revolutionary nationalism of the 1930s with its emphasis on self-determination and sovereignty. They denounced heavy reliance on foreign credit as a surrender by the government of its independence. Cuauhtémoc himself argued that "behind the sources of credit stand vested political and economic interests that, in addition to mere financial profits, sought to transform a commercial relationship into one of political dependency. Negotiations concerning our debt are dominated by our imperialistic neighbor, whose government has been dangerously aggressive and uses strength as an instrument to resolve its problems."

Neo-Cardenistas criticized the government of Miguel de la Madrid for giving its highest priority to repaying the nation's foreign debt-which amounted to 70 percent of GDP-at a time when unemployment was high and domestic savings low, instead of trying to stimulate the economy and putting the Mexican people's interests ahead of those of foreign bankers. To better understand their point of view, it is useful to remember that the enormous external debt of the Latin American countries was partly the result of the oil crisis of the 1970s. Vast profits accruing to the exporting countries, called petro-dollars, were deposited in international financial institutions. These, in turn, began a lending frenzy so that their assets would produce dividends. Soon, interest rates soared to as high as 22 percent, while prices for raw materials dropped sharply. A high official of Mexico's leading development bank, National Financiera, recounted later that agents for the banks used to stand in line to offer loans according to the conditions stated above.

Neo-Cardenistas therefore argued that the government should not rush to negotiate the terms of foreign debt, which in truth was the responsibility of both debtors and creditors. When the latter knowingly made loans that exceeded the countries' capacity to pay, they actually meant to make the countries more vulnerable to external pressures. Therefore, they argued, creditors should be required to offer better terms, such as extension of repayment periods, lower interest, debt forgiveness, and limits on the size of remittances relative to exports and GDP."

The Neo-Cardenistas did not call for a simple debt moratorium, however, but rather strenuous negotiations to limit capital outflow. They would place a lower priority on debt payment in favor of investing in economic development that would benefit the nation and all it's people. This would also improve the general standard of living and create new jobs.

De la Madrid had counted on petroleum exports to supply all the foreign currency needed to service the debts. In fact, knowledge of Mexico's huge oil reserves had induced international bankers to make loans in the first place. When oil prices retreated in the 1980s, however, de la Madrid found he had to authorize even higher exports. Neo-Cardenistas criticized this move because according to the experts the world reserves would be exhausted in twenty to thirty years. Given this fact, Mexico should have limited production to cover domestic needs only. Otherwise over-exploitation would jeopardize the future of the country.

Beyond the estimates of future world prices, the whole issue of Mexico's petroleum was extremely sensitive. Lázaro Cárdenas had to confront the great powers when he expropriated the oil properties of foreign companies in 1938. North American and, above all, British interests threatened intervention for a time. Cárdenas enjoyed special reverence for this move, which permitted Mexico to make enormous economic progress during and after World War II. For this reason neo-Cardenistas distrusted the motives of policymakers who pushed for greater exports. Cuauhtémoc believed U.S. strategic planners "want to use our reserves today in order to conserve their own; they consider our reserves as part of their strategic resources".

Neo-Cardenismo also defended the independence of the country with respect to foreign capital, above all that of the United States. General Cárdenas, upon the termination of his presidential term in 1940, wrote to his successor, Gen. Manuel Avila Camacho, exhorting him to give preference to domestic over foreign investors in order to avoid de-capitalizing Mexico. This was the political ideal and thesis of neo-Cardenismo, and the basis tar criticism of PRI. It was also the foundation for the alliances of several progressive parties, especially those supporting Cuauhtémoc for president in 1988.

THE DEMOCRATIC CURRENT

On the basis of those ideas and principles, in mid-1985 Cuauhtémoc Cárdenas started talks with other politicians within his own party, the PRI, particularly one of the leading ideologues of the Mexican revolutionary nationalism, Porfirio Muñoz Ledo. The former was nearing completion of his term as governor of Michoacán, and the latter was finishing his tour as Mexico's ambassador to the United Nations. Over the next year they built a progressive coalition within the PRI called the Democratic Current. The public announcement of their alliance in August 1986 caused great consternation in political circles. Some PRI stalwarts leaned toward joining the Democratic Current, but few actually did. The president of PRI moved quickly to negotiate a truce with them. He requested that the dissidents refrain from attacking the government's economic policies and PRI's undemocratic internal procedures. The Democratic Current leaders could not, however, accept such restrictions since these positions were central to their movement. Other efforts were made to tone down the dispute, but it was clear that major policy differences undermined traditional PRI unity.

Less than a year later, Cuauhtémoc demanded that during the PRI convention they poll local leaders throughout the country in order to select the next presidential candidate and determine planks for their platform. Such consultations, amounting to a primary system, would have replaced the hoary tradition of the "tapado" the custom of the president designating his successor. The PRI leadership rejected the proposal, despite the fact that article 147 of the party bylaws actually ailed for open primaries. Because of these attacks on party procedure, the PRI leaders abandoned their efforts at conciliation, and the split between them and the Democratic Current widened. On March 10, 1987, the party expelled Cuauhtémoc, and Muñoz Ledo resigned shortly after.

The Democratic Current then became an independent movement, since its populist-revolutionary traditions had been rejected and it was barred from coming to power through the PRI. Its leaders proclaimed that the PRI had lost its way due to the apathy and inertia of its leaders. PRI only survived, they said, by means of election fraud that discouraged the participation of progressive members. The Democratic Current held that it must press for democratization within its ranks so that the party could become an agent of free and popular elections among the general population. A second major theme was "to improve living conditions for the masses through an economic recovery along popular nationalist lines."

Economic nationalism formed a cornerstone of the Democratic Current program. This included restrictions on foreign ownership of manufacturing firms, protection of natural resources and capture of business profits for the good of the nation itself. It also highlighted the need for international cooperation to proceed on the basis of parity among nations.

On the domestic political scene, the Democratic Current stressed the desirability of restoring "the national alliances that protected the sovereignty, progress, and stability of the nation"-that is, the Cardenist coalition of the 1930s of associations participating in decisions made at various levels of the state in a certain way, which makes it possible to speak of modern corporatism.

Once the Democratic Current had broken definitively with PRI, the way was clear for Cuauhtémoc Cárdenas to run for president as an independent. His candidacy, announced in July 1987, won the immediate support of the Authentic Party of the Mexican Revolution, which had languished in the shadow of the PRI for thirty-five years.

Cuauhtémoc's candidacy was soon supported by splinter parties from the left, including the Mexican Socialist (formerly Communist) Party. This electoral coalition was called the Democratic Front. The residual popularity of Lázaro Cárdenas certainly added to Cuauhtémoc's appeal, but his own personality, along with his "sad dog" visage, also attracted support. Finally, the serious depression and unemployment undoubtedly boosted his following.

The results of the August 1988 election were clouded by claims of fraud, but as usual the official party candidate, Carlos Salinas de Gortari, was declared the victor. His margin, however, was unusually narrow: Salinas 53 percent; Cárdenas 31 percent; and Manuel Clouthier, the conservative candidate of the Party of National Action (PAN), 17 percent. In the 1988 congressional election, PRI won only 51 percent of the seats, compared to 29 percent and 18 percent, respectively, for the other two. The victory of Salinas de Gortari was actually a wake-up call for the entire political system.

REJECTION OF POPULISM

During the next few years the global situation underwent more changes. Neo-liberal economics, favored by Great Britain and the United States, won more converts. It prescribed total surrender of the economy to market forces and elimination of state intervention. The International Monetary Fund (IMF) was a conspicuous advocate of neo-liberalism, and some of the countries that adopted it, the so-called newly industrialized countries, made considerable progress.

President Salinas, who was the primary architect of de la Madrid's economic program, also adopted the neo-liberal model and explicitly rejected populism. He blamed populism for the country's crisis but failed to mention the role played by incompetent and corrupt governors. Like de la Madrid, he repudiated state guidance of the economy and continued to privatize the public-sector enterprises. He dropped all pretenses of economic nationalism and stressed the acceptance of foreign investors, especially those from the United States. To the extent possible, his administration favored returns to capital over those to labor. Employment and workers' well being became mere dependent variables of the economy. Productivity and profitability became the overriding goals of the government. Finally, all of this should be regulated only by the law of supply and demand; that is, a return to nineteenth-century laissez-faire.

In rural areas, meanwhile, property ownership patterns underwent profound transformations, almost the opposite of those brought about by classical populism. The agrarian reform law was amended to permit the sale of ejidos. Moreover, domestic and foreign investors could purchase ejidos land. Finally, formerly sanctioned social ownership of the land was eliminated in favor of private ownership.

Under the neo liberal regime, the popular organizations represented labor and farmers were relegated to carrying out decisions made in the planning ministries. Efforts to raise salaries met with rigid opposition, so that labor leaders became mere spectators and executors of high policy. They could not prevent the general redistribution of income from labor to capital and were forced to issue humiliating statements of solidarity with the government agencies. Rank and file, denied both electoral influence and genuine union representation, could only take their grievances to the streets in protest.

Even more remarkably, PRI's platform had become so conservative that it approximated that of its traditional rival, the Party of National Action (PAN). Still, President Salinas held on to some of the traits of populism, such as formulating a general program of government that, if implemented, would benefit labor, farmers, and the middle class. This holdover was no more than window dressing, however, for employers and business managers refused to accept it. He sustained as well the traits of corporatism.

To stimulate economic growth, meanwhile, President Salinas implemented a vigorous program of infrastructure investment, called the Program of National Solidarity (PRONASOL) that absorbed a third of public expenditures. Much of this money came from the sale of public enterprises. The highly publicized successes of PRONASOL were popular and boosted the PRI's turnout in the off-year elections of 1991. Prior to the voting, television spots praising the virtues of PRONASOL were repeated every five to six minutes over virtually every station. To capitalize more, the emblem of PRONASOL was almost identical to that of the PRI.

Perhaps even more important to Salinas's success than PRONASOL was the beginning of economic recovery prior to the elections. The growth cycle affected not only legitimate businesses but the tens of thousands of so-called informal businesses that operated on the margins of the legal system, paying no taxes, social security, or other levies. This huge but little studied sector accounted for between 20 and 30 percent of the economic activity of the country. Likewise, the informal sector employed a fifth of the work force, some 5.7 million people, including many thousands of children working in the streets around the country, mostly as vendors. Their teenage and adult counterparts worked in artisan shops, peddled wares from pushcarts, washed windshields at traffic intersections, and found other casual work. Even if the government had wished to halt this informal entrepreneurial activity it could not have. And some economists believed that a significant share of the recovery in the 1990s was due to the informal sector. Such spontaneous economic growth seemed to avoid the kinds of violence and social problems that assailed other Latin American cities like Sao Paulo and Caracas.

The results of the neo-liberal economic recovery in the mid-1990s were important. Economic growth resumed, inflation diminished, and new money flowed into direct investment. Capital returned from abroad. The GDP began growing at rates of 4-5 percent a year. Still, according to the Economic Commission for Latin America, income inequalities were growing worse. Half the population was poor and 22 percent lived in conditions of extreme poverty. As we will see, since the neo-liberal economic strategy could not overcome this situation, it could hardly have been regarded as a success.

The shift from populist politics to neo-liberal ones seemed the result of the influence of the International Monetary Fund (IMF). It meant abandoning the dream of turning Mexico into a developed country using its own resources and capital while guaranteeing a fair distribution of wages among all the social classes. The neo-liberal state was incapable of doing such things.

Salinas's political record, meanwhile, was tarnished by the persistence old traditional autocratic behavior in the executive branch. He refused to dismantle the corporative state. Working directly and through the PRI, the government controlled all state agencies. PRI could not survive without the patronage it reaped from government jobs, and the government could not survive without PRI's ability to mobilize voters at election time and, when necessary commit fraud. This created a great tension, for Salinas experienced considerable pressure from below and abroad to democratize the regime.

Few signs suggested that political reform was imminent under Salinas.

The PRI victories in the August 1991 elections were full of irregularities; it used all the state financial resources to win. Moreover, the Mexican Institute of Public Opinion estimated that PRI accounted for 97 percent of political advertising on television, 86 percent on the radio, and 72 percent in the print media. The remainder was divided among the other nine parties.

THE DISCREDITING OF NEOLIBERALISM

Carlos Salinas finished his term with an aura of triumph. Unfortunately, the glow masked failures and deep divisions. As reported by the Economic Commission for Latin America, Salinas ignored nearly half the population-that is, the masses who lived in extreme poverty and who erupted in violent protest. On January 1, 1994, the day that NAFTA took effect, the Indians of Chiapas rose up in revolt to demand that the government desist from the dispossessions and exploitation they had been subjected to for five hundred years. Neo-liberal policies had driven down standards of living, which among the Indians were already so low they were pushed over the edge of violence. The leaders of this revolt claimed to be the heirs of Emiliano Zapata, and their armed movement adopted the name Zapatista Army for National Liberation (EZLN).

The conflict had interesting ramifications. In its wake arose powerful social forces that once had a marginal action-in a word, the civil society. Immediately, myriad nongovernmental organizations came to the defense of the Zapatistas and obliged the regime to declare a general amnesty and to hold talks with the rebels. The negotiations gained worldwide attention because they were held in the cathedral of San Crist6bal Las Casas, capital of the state of Chiapas, under the auspices of Bishop Samuel Ruiz as mediator and under the watchful eyes of thousands of unarmed onlookers. This attention prevented an attack by rural bosses and landowners who believed that their properties were threatened, properties they had often acquired through expropriation from the Indians or maintained illegally with the complicity of the authorities.

The talks failed, and from that moment on, Salinas stopped efforts at reaching an understanding. The rebels remained on the scene, a problem left for the next administration.

The neo-Cárdenas movement felt great sympathy with the Zapatista rebels, and their only hesitation had to do with the rebels military approach. The neo-Cardenistas and the newly founded Party of the Democratic Revolution (PRD), heir to the Frente, gained strength even though they did not establish direct links to the Zapatistas.

The year 1994 was critical in the political realm even though it was tinged with blood. PRI presidential candidate Luis Donaldo Colosio was assassinated, as was Sen. Francisco Ruiz Massieu, general secretary for the PRI. Fingers immediately pointed to the party itself and to the government.

The struggle for democracy within the PRI led to deep divisions and signs of dissolution. The progressive wing led by Cuauhtémoc and Muñoz Ledo persisted under the form of a new group called Democracy 2000.

State-level elections also affected the struggle of the PRD and neo-Cardenistas, especially where fraud marked the results and the reformers protested. In some of these same cases, the conservative National Action Party (PAN) also protested, and in those instances President Salinas ordered the results thrown out and PAN candidates were sworn in. In this struggle for democracy, the PRD waged the battle and PAN reaped the rewards.

ZEDILLO AT THE HALFWAY MARK

In the 1994 presidential campaign, Dr. Ernesto Zedillo warned that if the opposition won, the country would be destabilized and thrown into a severe crisis. He stressed that his election would bring an immediate improvement in family incomes. He also referred constantly to the assassination of Colosio to elicit voters' sympathies. He succeeded with this simple stratagem, using the electronic media to provoke fear and uncertainty in the wake of the Chiapas uprising and to promise stability if he won. The massive use of public funds for this media campaign was as blatantly illegal as it ever was.

The voter turnout in 1994 was very large, over 80 percent, and Zedillo won a clear victory using the tactics just described. The official party also won an absolute majority in Congress, giving it overwhelming control of both houses.

On December 1, 1994, the ritual changing of the guard took place. President Salinas passed the mantle of power to Zedillo, saying that he had given the Mexican people unprecedented prosperity. But the truth was very different. The political events of the preceding year had left their marks, some quite deep. The Indian uprising in Chiapas had not produced serious economic consequences, but the political assassinations did.

Salinas's financial and commercial policies, as well as his record in other areas, was quite poor. His neo-liberalism provoked the Chiapas rebellion, as already noted. In addition, unemployment rose due to NAFTA's failure to produce immediate economic expansion. In fact, tens of thousands of Mexicans lost their jobs due to bankruptcies and cutbacks. The National Institute of Statistics, Geography, and Computation reported that in 1994 industrial employment fell by 4.8 percent.

The logical conclusion is that Salinas's economic program lacked a firm basis. His attempts to carry out deep-going economic reforms that would launch Mexico into the First World failed utterly because he did not complement them with political changes. Other factors influenced the crisis. The Salinas administration had financed its current account deficits by attracting foreign investment to the stock market. This was speculative, short-term capital that at the first sign of trouble would be withdrawn in search of more secure sites. This policy proved extremely harmful to the economy because it led to instability and disruption of production.

In its first three weeks, the Zedillo administration found it necessary to take drastic action to correct the errors of the past. Zedillo ended the exchange controls that had maintained the overvalued peso. In a matter of weeks, the currency suffered a devaluation of 75 percent, which then skidded to more than 100 percent (140 percent in 1998). The country plunged into a financial and political crisis of vast proportions.

The crisis that enveloped Mexico in early 1995 practically paralyzed the economy. Many huge investment projects were canned. Large industries went bankrupt, domestic demand contracted rapidly, and layoffs became inevitable. The political, economic and social situation was extremely unfavorable to the incoming Zedillo administration. The new president could not count on PRI to provide clout, because the party was deeply divided by internal conflicts. Even Zedillo began to distance himself from the PRI. He hoped to satisfy the opposition that he would separate the party from the state apparatus. Moreover, the huge public enterprises sector, politically important, had almost disappeared.

The logical consequence of Zedillo's approach was an economic austerity program unveiled just as the administration completed its first one hundred days in office. This program contained all the familiar measures favored by the IMF during the previous two presidential terms: sharp drop in government expenditures (9.8 percent less than 1994 levels); 20 to 35 percent higher utilities fees; and a 50 percent increase in the value-added tax. These measures were designed to avoid inflationary currency emissions, public indebtedness, and rising interest rates (which in mid-1995 ran about 100 percent per year).

The Zedillo economic recovery program drew its inspiration from neo-liberal, monetarist theories, which favored profits for capital-even speculative capital-and minimized the effects of domestic demand. Further, they favored high unemployment and wage controls to eliminate inflation and restart the economy. However, during the preceding twelve years of neo-liberalism high unemployment and low purchasing power of workers caused Mexican industry to operate at low levels of capacity, around 70 percent. Keynesian theory counsels "priming the pump" by expanding domestic spending to stimulate industrial recovery. This was not possible, however, under the terms of the March 1995 program.

Very few sectors of the Mexican population responded favorably to Zedillo's crisis management, not even most businessmen, because they realized that Mexicans had reached the limits of their tolerance. The program pushed vast numbers of people below the poverty line. In contrast to the perhaps twenty-five million newly impoverished wore the small number of businessmen who profited. Undoubtedly they included the handful of Mexican billionaires who made their fortunes during the Salinas regime. These men managed to purchase at bargain prices the assets that public corporations had accumulated over the previous fifty years.

At the halfway mark of his administration, Zedillo got mixed reviews. On the one hand, the president and his team (supported by the IMF) claimed that the crisis was giving way to recovery. On the other hand, the opposition parties (PAN and PRD), some businessmen, and public opinion as a whole complained of the depressed condition of the economy.

C O N C L U S I O N

Mexico has experienced populist regimes for a long period of time. Indeed the very ideology of the revolution was imbued with populism. Gen. Lázaro Cárdenas epitomized Mexican populism by mobilizing the workers, farmers, and even the middle classes, all of whom he incorporated into organizations supportive of his reforms. He effected a redistribution of wealth through wage policies and agrarian reform. He instituted programs to protect Mexico's indigenous population. His economic nationalism, meanwhile, led to a strong preference for national investment over foreign capital. Finally, when international petroleum companies challenged his authority, he expropriated their properties. This is the positive aspect of populism. On the other hand, he mobilized the workers, farmers, and even the middle classes, all of whom he incorporated into organizations supportive of his reforms.

The populist model began to break down in the 1950s due to decreasing dynamism in industry, where expansion from import substituting activities became more costly. Corruption at all levels of government also lowered the legitimacy of the regime and counteracted efforts to plan. Luis Echeverría attempted to resurrect the classic populist alliances and pursue the goals of the 1910 revolution but failed. Conditions had changed so much, especially with the consolidation of the economic elite that he could not exercise enough power to push through his reforms. Private sector enterprises had become more powerful, and the government had lost the allegiance of the workers, farmers, and middle class. Finally changes in the global economy, including cyclical price and investment waves, also helped to undermine a return to a Cárdenas-like regime in Mexico.

Miguel de la Madrid tried to escape this impasse by adopting neo-liberal policies such as those prevailing in Great Britain and the United States. He also failed, and the economy languished in near paralysis in the mid 1980s. Generalized discontent with the government sparked a surge of opposition within the PRI, criticizing not only the neo-liberal economic policies but also the rigidity and lack of democracy in the party itself. The same policy was followed by Salinas, who rejected populism but not the old corporate associations, which had become more dependent on the government and therefore less effective. This meant sacrificing employment and the hope for higher standards of living.

By the 1990s dissent had coalesced around the leadership of Cuauhtémoc Cárdenas, son of Mexico's great populist of the 1930s. He resurrected the ideology of his father, based on the so-called revolutionary nationalism and populist mobilization of the masses.

The PRD leaders, especially Cuauhtémoc Cárdenas, who attempted to revive the kind of expansive, mass coalition that Lázaro Cárdenas forged in the 1930s, found themselves stymied by undemocratic power politics wielded by PRI bosses. Even PRI leaders who favored democratization were thwarted. The monolithic power of the official party remained virtually intact in the early 1990s. Thus neo-liberalism and neo-populism remained antithetical to each other.

Despite the fact that the post-Echeverría presidents of Mexico have opposed the classical populist approaches, which include the alliance among classes, they may not be able to prevent their resurgence in the future because of intolerable disparities in productivity, income, and wealth. The breaking of the old alliance with the working classes is evident: labor leaders have become extremely wary of neo-liberalism and some have asserted themselves in favor of neo-Cardenismo as it occurred in 1988.

In the countryside, pre-revolutionary sociopolitical relations subsist in which caciques preserve oligarchic landowners. Without social justice in rural areas, tens of thousands of landless poor flee to the cities each year, compounding urban problems.

The middle classes have yet to define their position with regard to neo-liberalism versus neo-Cardenismo. As the principal beneficiaries of economic development, they naturally supported the status quo in the 1980s. Yet they showed in the elections of 1988 that they were capable turning against the government when their incomes shrank. Their conservative tendency may be reversed because the traditional opposition party, PAN, tends to assimilate itself with the PRI, leaving neo-populism as the only credible option, as it was in the elections of 1997. Still, it may also be possible that the middle classes will veer toward the radical right, supporting fascist-style parties of the sort that have not existed for a long time in Mexico.

It is very unlikely that well-to-do voters supported Cuauhtémoc in the elections. Virtually all neo-liberal policies followed from the early eighties favored the wealthy, who naturally showed their preferences for the regime. Were a populist coalition to emerge in the future, it would almost certainly be opposed by the upper class, thus exacerbating class struggle. That situation might lead to a fascist-style regime in which the wealthy maintain their hegemonic role by manipulating the masses in an authoritarian framework.

The political panorama of Mexico today is changing. The neo-Cardenistas must challenge and defeat the official party and transform into a social democratic movement. Paradoxical as it seems, Cuauhtémoc and his followers must fight against the system that his father helped acute, especially the corporative character of its social relations at all levels.

In any event, democracy has made a number of advances in Mexico, thanks to the pressures exerted by the neo-Cardenist struggles that have cost them several hundred followers.

In the political arena, many conflicts have erupted due to the survival of antidemocratic practices by members of the PRI, which interrupted peace talks with the EZLN and slowed democratic reform of the state. Within this panorama, the elections for deputies to the Congress and representatives to the assembly were celebrated on July 6, 1997, and for the first time in history, for the governor of Mexico City. The results showed a deep disdain for the PRI, which lost the majority in the Chamber of Deputies and almost all of its seats for representatives in the assembly, most of which went to the PRD. Even most important, Cuauhtémoc Cárdenas, the PRD candidate for governor of the Capital, won by a good margin.

The country is thus divided between three forces: PRI and PAN on the right, and PRD on the center-left. But this is just the beginning the first step in the transition toward democracy. The next step, the consolidation process, has to be preceded by a deep redistribution of income, just as the populists of the 1930s proposed. Otherwise, the momentum might be lost and the old corporatist and antidemocratic system (characteristics also shared by populism in Mexico) could appear again.