AMLO’s way

Mexico’s president has a mandate for radical change, but this change must be negotiated within a context of limits produced by the neoliberal period itself.

President Andrés Manuel López Obrador. Image credit Eneas De Troya via Flickr CC BY 2.0.

Andrés Manuel López Obrador’s government has, up to now, two principal axes that guide official decisions: 1) the conception of corruption not as an individual crime but rather as a specific political economy and 2) a neo-developmentalist and nationalist view of the role of the state in the economy.

In AMLO’s view, neoliberalism turned the country into a kind of reverse rentier state, in which members of the government did business with a network of contractors that drained public funds through a series of mechanisms—from outsourcing government functions, to offering services for more than they’re worth, and, in the most extreme (but common) cases, creating a parallel structure of ghost companies to “win” government contracts and produce fake receipts in the service of tax evasion. The vision of the current government is that these networks of intermediation—clientelist brokers, but also NGOs that received government funds, trusts (fideicomisos), or simply private companies hired out by the state to carry out specific services, among others—should, in general, be targets of intervention, seen as opaque and redundant and a key bottleneck facilitating budgetary capture.

AMLO’s government has combated these practices, reorganizing and recentralizing public spending to make cuts “from above” (what he calls “republican austerity”), as well as creating an aggressive Financial Intelligence Unit that investigates white-collar fraud. Additionally, he has eliminated tax condonations obtained through lobbying by large corporations. These efforts have produced, in a country with tax collection rates below the OECD and LAC averages, an increase in tax collection from top earners without resorting to a reform of the current tax structure, essentially a de facto progressive tax reform.

The government’s development strategy consists of channeling funds to a series of programs like no-strings-attached cash transfers to students, senior citizens, and disabled people, among others; a professional internship program for young adults; plus guaranteed high prices and subsidies for small farmers. The new or expanded slate of cash transfer programs operates under a decidedly different logic than that of the previous decades, moving away from social programs that were micro-targeted and means-tested, to a universal and right-based approach. While the cash transfer programs are targeted to broad sub-groups, the conditions for accessing these programs are minimal (basically being a member of that group is enough). The programs have now been adopted into the Constitution, cementing their framing as universal rights rather than focalized “hand-outs.”

The series of infrastructure “mega-projects” led by the state (and cancellation of private-led ones like the Texcoco airport) also mark a move away from the neoliberal era: the Felipe Angeles airport, a refinery, the Maya Train on the Yucatán peninsula, a transportation corridor on the Isthmus of Tehuantepec connecting the Gulf of Mexico with the Pacific Ocean, a project to build rural roads and a reforestation program, attest to this. In addition, all these projects are framed around pre-neoliberal ideas about the importance of generating public-works jobs.

The energy sector has received particular attention. There has been an attempt to revamp the productive capacity of the state-owned oil company, Petróleos Mexicanos (PEMEX) to turn it into an engine of growth. New laws have advanced the government’s conception of energy sovereignty. This includes the nationalization of lithium and the new Electricity Industry Law, a law that eliminates existing requirements that the Comisión Federal de Electricidad (CFE), the state-owned electricity company, purchase electricity from the private sector, instead favoring electricity generated by the CFE itself. Both reforms aim to prop up the relative power of the public sector, emaciated during the neoliberal period.

There have also been some changes on the matter of organized labor that may have significant effects in the mid-to-long term. The formal rights of domestic workers have been recognized for the first time, and a new law eliminates the precarious hiring practice of outsourcing. More importantly, a labor reform designed to facilitate union democracy is now in effect (moving away from the company union model that was a staple in the country during the 20th century).

The measures outlined, however, must be negotiated within a context of limits produced by the neoliberal period itself: the disorganization of the working class as a political agent capable of pushing the government to the left, the hollowing-out of the state hindering the execution of several government projects, and the crisis of violence produced by drug trafficking. The latter has resulted in a build-up of private security forces, which bring with them all the contradictions that such forces might represent for those at the helm of state power.

Further Reading