Hedging neoliberalism: derivatives as state policy in Mexico

ABSTRACT

This article fills the gap in the critical political economy literature by acknowledging the adoption of derivatives as state policy in middle-income countries such as Mexico. The article argues that the Mexican state has turned derivatives into a policy instrument to deal with the capitalist contradictions intensified by neoliberalism. This has created a particular institutional setting that favours large firms and financial investors over working classes. The article examines the role of derivatives as policy instruments in Mexico through the Mexican Ministry of Agriculture’s use of corn futures options during the 2007–8 food crisis and Ministry of Finance's and Central Bank's adoption of hedging strategies through oil derivatives and US dollar put options to preserve the state budget and increase foreign reserves respectively during the 2007–10 global financial crisis.

KEYWORDS:

• Derivatives
• neoliberalism
• Mexico
• state policy
• critical political economy

Notes on contributor

Hepzibah Munoz Martinez is Assistant Professor in the Department of History and Politics at the University of New Brunswick Saint John campus. She teaches political economy and Latin American politics, and she is part of the advisory board of the Centre for Criminal Justice at University of New Brunswick. She is a former visiting research fellow at El Colegio de la Frontera Norte, Mexico.