Crisis, Social Class, and the ‘Fixing’ of Capitalism in Mexico

Abstract

In 2007 the American economy experienced a severe crisis which spread through credit and financial markets, leading to declining rates of investment, lower consumption and growing unemployment in the United States. In an interview at the end of 2008, Agustin Carstens, former Minister of Finance (2006–9) in Mexico and head of the Mexican Central Bank between 2010 and 2016, stated that economic stagnation in the United States would have a limited effect on the Mexican economy. When the interviewer noted that Mexico usually catches ‘pneumonia’ when the United States has an economic ‘cold’, the minister responded that this time the Mexican economy would only ‘catch the sniffles’ (Notimex 2008). He believed that Mexico’s sound policies of fiscal austerity, public debt management and reserve accumulation would protect its economy from external shocks (Gil Diaz 2009: 29–31). However, this did not occur, and Mexico’s GDP declined 6 per cent in 2009 (INEGI 2011a). According to Mexico’s National Council on the Evaluation of Social Development Policy (CONEVAL), the number of people living in poverty increased by 3.2 million between 2008 and 2010 (CONEVAL 2011). The transmission mechanisms linking the American financial crisis to the Mexican economy were diminishing exports to, and workers’ remittances from, the United States, Mexico’s main trading and investment partner.