Mexico

The Mexican Miracle

Cárdenas's emphasis on labor rights and organized labor's increased participation in civil society gave rise to the period scholars refer to as the Mexican Miracle. The ruling party, which was later named the Institutional Revolutionary Party (PRI), took control of Mexico's leading labor institutions, such as the Congress of Mexican Workers (CTM), the Federation of Unions of Workers at the Service of the State (FSTSE), and the National Peasant Confederation (CNC). Cárdenas's administration also successfully installed the Federal Board of Conciliation and Arbitration (JFCA), which at the local level regulated union recognition, collective bargaining agreements, and the legality of strike.

The PRI introduced import-substitution industrialization (ISI) as a model for economic development in the early 1940s. ISI initially provided excellent results. Predicated on Keynesian state spending policies and inspired by the work of renowned Latin American economist Raul Prebisch, the ISI model consistently produced an annual growth rate of 6 percent. The model relied on high rates of productivity through mass production that lowered prices and stimulated internal consumption. In addition, ISI reduced income disparities when the Mexican state used collective bargaining to increase real wages for blue-collar workers. However, the PRI's corporatist structure turned conservative in the late 1940s. Although the ruling party utilized its political infrastructure to facilitate economic growth, it also used its institutions, such as the CTM, to control labor unions and violently suppress political opposition.

Two unemployed construction workers wait for jobs at the Mexico City Metropolitan Cathedral, March 30, 2009. The opening of the Mexican economy and lack of labor protections have left the working class and rural peasants with few options.

By the early 1970s, ISI no longer functioned as a feasible development model. Rising inflation rates, market saturation, and mounting debt forced Mexico to reevaluate its economic development strategy. Meanwhile, the government's widespread corruption and growing violence against university students and independent labor groups threatened the state's political legitimacy. The PRI turned to popular reforms, such as increased subsidies on staple foods, to mask the economic and political downturn. Sarah Babb points out that to make matters worse, after heavy borrowing, the debt crisis in 1982 derailed the Mexican government's hope of making applicable reforms to mend its ISI model. Labor felt the brunt of the crisis. Over a two-year period, the value of the Mexican peso declined 800 percent. Although this gave employers a bargain on labor costs, sharp inflation spikes put the cost of consumer goods out of reach for most Mexicans.

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