Fractured elites : the politics of economic crisis in Mexico

Abstract

Economic crises are such powerful socioeconomic disasters that, not surprisingly, they are usually explained by powerful socioeconomic pressures, such as global financial speculation, structural economic failure, or populist demands. This thesis, in contrast, identifies the crucial role of elite politics. From the 1950s through the 1980s politics inside a tiny circle of high Mexican officials made the difference between economic crisis (when the exchange rate crashes) and stability. In the 1950s and 1960s, competing grupos, or cliques, within the ruling party abided by a "cooperative" system. The grupo whose leader won the internal contest for presidential nomination, hence automatically won the election, would do better, but losing grupos retained important posts. Such assurance of political survival allowed elites to defend the political system's long-run interests, not just their narrow self-interests, and avoid economic crises. In the 1970s and 1980s, "struggle" emerged as power conflicts became all-or-nothing, erupting in massive expenditures, other economic gambles, and crises. Public spending soared in pre-election years (27 percent in 1975, 22 percent in 1981), when grupos vied to build support for their leader's presidential nomination. Slashing it in the actual election years (0 growth in 1976, 8 percent decline in 1982, excluding debt payments) was too late to avert economic crisis. Most studies of economic crises in developing nations focus on what went wrong - and find too many possibilities. By scrutinizing Mexico's economic stability in the 1950s and 1960s (when nations such as Brazil and Argentina suffered repeated crises), this thesis is better able to discover the critical characteristics of political success that later eroded.

(cont.) The relationship between state and society did not change; the system of elite politics did. Many interviews with high officials reveal how this system worked, and illuminate important facets of Mexican economic history. The more general lesson is that politics at the heart of the state is not just a small replica of society. While external constituencies endure, elite factions survive or die politically. How they handle mutual conflicts can have momentous effects on a nation.