A farewell to urban/rural bias: peripheral finance capitalism in Mexico

Abstract

Based on a discussion of the structural transformation of the Mexican economy, this paper investigates the impact of financialization on agriculture’s role in capitalist development. It argues that the peripheral financialized economy is a rural–urban economy. On the one hand, agriculture and industry are bifurcated into a growing export sector and a stagnating local economy, and there are no functional ‘developmental’ links between capitalist agriculture and industry. On the other hand, the economic structures have resulted in the consolidation of a huge mass of rural–urban ‘classes of labour’. Capitalist agriculture and industry are linked through and dependent on cheap labour sustaining the export economy. I argue that the current economic formation is not due to ‘urban bias’, ‘rural bias’ or any misallocation of resources among economic sectors. Rather, it can be explained in relation to ‘finance bias’: the taking over of debt relations as the key driving force of economic activities. A major contradiction in peripheral finance capitalism arises from the financing of cheap labour through debt. This is likely to result in new financial crisis, when the contradictions between increasing levels of (private and public) debt, a stagnating domestic economy, and below-subsistence level wages become too large.

Keywords:

• financialization
• urban–rural links
• Mexico

Notes

1 Agrarian change has different determinations that play out at different scalar levels: those internal tothe countryside; those internal to ‘national’ economies; and ‘external’ ones emanating from the world economy. Studying the latter serves to locate and elaborate the other determinations (Bernstein 2016, 642). This paper focuses on the interlinkages between the financialized world economy and Mexico’s national economy, and thus on the structural level of capital accumulation.

2 Prices compared to international agricultural prices and prices of other domestic sectors.

3 All countries became more dependent on food imports in the ‘neoliberal food regime’. However, while the US, Canada and Western European countries primarily import luxury foods, developing countries depend on the import of basic food (Otero, Pechlaner, and Gürcan 2013, 275).

4 To my knowledge there is no more recent estimation.

5 Including agroindustrial exports.

6 US treasury securities are also issued by other government-sponsored agencies.

7 An example of a Mexican transnational agribusiness is LALA (Otero, Poitras, and Pechlaner 2012).

8 If the sectors ceased to be relevant categories for capitalist development on a national scale, a question that follows is how are they related on a world scale.

Additional information

Notes on contributors

Nadine Reis

Nadine Reis is an assistant professor in the Department of Geography at the University of Bonn, Germany, and a recent recipient of a PRIME fellowship. Her research focuses on critical political economy, financialization, nature and state power, with a regional focus on Latin America (especially Mexico) and Vietnam. She is the author of the book Tracing and making the state: policy practices and domestic water supply in the Mekong Delta, Vietnam (LIT Verlag, 2012). Email: [email protected]