From Neoliberalism to Social Liberalism Situating the National Solidarity Program Within Mexico’S Passive Revolutions by Susanne Soederberg

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LATIN AMERICAN PERSPECTIVES Soederberg / FROM NEOLIBERALISM TO SOCIAL LIBERALISM From Neoliberalism to Social Liberalism Situating the National Solidarity Program Within Mexico’s Passive Revolutions by Susanne Soederberg

Launched by President Carlos Salinas de Gortari in 1988, Mexico’s Programa Nacional de Solidaridad (National Solidarity Program— PRONASOL) has become the organizational center of an ever-changing, complex web of education, health, productive, and infrastructural projects aimed at improving the living conditions of the poor (PRONASOL, 1991). This de facto welfare program, which embodies Salinas’s “third-way” doc- trine of social liberalism, basically claims to be more humane and democratic than unfettered free-market capitalism and heavy-handed state intervention- ism. The objective of this article is not to supply another policy assessment of PRONASOL but to address a gap in the literature by providing a historical materialist account of its emergence. Seen through the lens of historical mate- rialism, PRONASOL is neither an attempt to alleviate the poverty afflicting well over half the population of Mexico nor a move toward constructing a stronger civil society in a top-down fashion (cf. Salinas de Gortari, 1990). Instead it is a reflection of new forms of ideological and political domination targeted at preserving the hegemony of the ruling classes while excluding the majority of Mexicans from participating in the formulation of state policy. In the face of the increasing poverty brought on by “modernization,” PRONASOL aims to weaken counterhegemonic movements in civil society as Mexico further deepens its dependent relations with the United States. Antonio Gramsci once referred to these expressions of political and ideological retrenchment in the relations between state and civil society as a “passive revolution” (1992). This article will suggest that there have been two passive revolutions in Mexico. It can be argued that the first of these passive revolutions, neoliberalism, emerged after the 1982 debt crisis whereas the second, social liberalism, took place during the late 1980s. The argument presented here will proceed as follows: First, it will explore the political and ideological implications of the relative autonomy of the state

Susanne Soederberg is an assistant professor of international political economy in the Depart- ment of Political Science at the University of Alberta. LATIN AMERICAN PERSPECTIVES, Issue 118, Vol. 28 No. 3, May 2001 104-123 © 2001 Latin American Perspectives

104 Soederberg / FROM NEOLIBERALISM TO SOCIAL LIBERALISM 105 in an effort to clarify my understanding of the Gramscian notion of the passive revolution of the “extended state.” Second, it will briefly discuss the political and ideological contours of the neoliberal passive revolution and its eventual deterioration. Third, it will examine the ideological and political meaning of PRONASOL within the reinvented form of neoliberalism, social liberalism. While the ideological component of this new configuration of the extended state is based on social liberalism, its political facet is based on continental rationalization. Here the argument is that PRONASOL is an integral political facet of an economic restructuring strategy aimed at deeper economic integration with the United States. The final section draws conclusions and discusses some of the argument’s political implications.

THEORIZATIONS OF A PASSIVE REVOLUTION WITHIN THE EXTENDED STATE

The analytical departure point of my argument is that PRONASOL, like most policy formulations in Mexico after the 1982 debt crisis, is a reflection of a passive revolution—a change in forms of political and ideological domination by the ruling classes that is rooted in the wider restructuring of the social relations of capitalist production, or civil society. This position hinges on Gramsci’s (1992) notion of the extended state, a state made up of both political and civil society. Whereas Gramsci places more emphasis on the state (or superstructure) as the active and positive factor in the historical development of capitalism, I accord equal weight to civil society; assigning the state a greater role in the perpetuation of class dominance inevitably leads to political determinism and thus to a distortion of state power. Since the notion of the extended state rests upon the wider concept of the relative autonomy of the state and civil society, it is useful to provide an explanation of this complex relationship. To start with, to observe that the bourgeois state is a moment of the capital relation is not to say that it is either an instrument of capitalists or capital factions or an autonomous actor. In contrast, the state is made up of various ideological and coercive apparatuses that constitute a specific material condensation of a relationship of forces among classes within civil society (Poulantzas, 1978). Because of the inherent contradictions of the capital relation and the inability of capitalists to resolve struggles with labor on their own, there is a need for a mediating force. The capitalist state plays this role by assuming the appearance of a separate institutionalized entity (or relative autonomy) vis-à-vis civil society. It is Janus-faced in that it is at once real and illusory. 106 LATIN AMERICAN PERSPECTIVES

Inasmuch as the state is an integral moment of the capital relation, its particularized appearance is fictitious. Because the state reflects power relations that are inherently contradictory and dynamic, public policy will take on these qualities as well (Poulantzas, 1978). Thus capitalist restructuring requires a constant renewal of political and ideological schemes to facilitate the implementation of policies aimed at overcoming the barriers to capital valorization. As the state attempts to intervene in civil society, it internalizes these conflicts and is in turn restructured. The relations between the state and civil society are dialectic rather than deterministic. At the same time, the state’s particularized position is real, for in guaran- teeing the reproduction of capital accumulation through various forms of intervention the state does not directly participate in the larger processes of the valorization of capital—production and exchange. From this point of view, the bourgeois state assumes the necessary appearance of class neutral- ity free of force. Nevertheless, this force can and must be overtly used if at any time the basis of the reproduction and self-expansion of capital and of exploitation is threatened by, for instance, a counterhegemonic movement (Hirsch, 1978). Following Gramsci, coercion itself is not enough to guarantee class rule and thus the continuation of capitalism. Therefore the consent that production enjoys among the subordinated classes is to be located in the power of consciousness and ideology. Class domination seeks to preserve domination over the masses by gaining active consent through their self-organization, starting within civil society and resonating in all ideological apparatuses (such as schools, universities, state-owned media, etc.) up to the workplace and the family (Buci-Glucksmann, 1980). Consequently, state policy con- sists of politics backed by coercion and ideology. The other component of the extended state is civil society. Civil society is not a neutral, private, classless (i.e., free from class conflicts) space sus- pended between the market and the state. Rather, it is situated within the larger social relations of capitalist production. Its constituting human elements are two opposing classes: capitalists and labor. It is the realm where the valorization of capital occurs and is thus marked by economic relations of exploitation. Because it is part of the extended state, it is not free of political forms of class domination. In contrast, it is interlaced with economic and political power and the dependency structures inherent in the capital relation. Consequently, it is the space in which, through public discussion and debate, the dominance of the state is legitimized and hegemony (consent) is pro- duced; yet, at the same time, it is also the object of state intervention (coercive force) (Gramsci, 1992; Hirsch, 1999). Civil society is not simply an instrument of class rule. Instead, it is a politico-ideological battlefield upon which alternative hegemonic concepts of societal order and development are con- Soederberg / FROM NEOLIBERALISM TO SOCIAL LIBERALISM 107 tinually being established, and this is particularly true during times of crisis and socioeconomic upheaval. Taken together, state and civil society form an intricate complex through which coercion and consent congeal in a “hegemonic bloc.” For Gramsci, hegemony is the ideological predominance of bourgeois values and norms over these of the subordinate classes. Through this hegemonic bloc one version of reality—for example, the mystification of one class, one society is diffused throughout the extended state in all its institutional and private expressions. Because of the contradictory nature of the capital relation, crises are inevitable, albeit unpredictable. In terms of the extended state, crisis implies not only economic restructuring but also political and ideological retrenchment in the relations between state and civil society. The crisis of capital over- accumulation that manifested itself in Mexico in the mid-1970s was marked by currency devaluations, heightened class struggle, high levels of unemployment, inflation, rising debt-to-gross-domestic-product ratios, balance- of-payment problems, massive migration to the urban areas, and capital flight. Moreover, it was propelled by a decrease in competitiveness in the productive sector that in effect ended in delinking the so-called real economy from the speculative economy (e.g., the one constituted by junk-bond deal- ers, leveraged-buyout specialists, and risk arbitrageurs). This made the sphere of production (workers, factories, jobs, etc.) more vulnerable to financial speculation.1 The most important link between these two spheres of capital valorization was the flow of credit. This flow was needed for restructuring in the productive realm but was unevenly channeled into the financial instead of the productive sector. Furthermore, the source of credit has shifted from the public to the private sphere, and thus its allocation has been subjected to the requirements2 of financial institutions. Taken together, these new charac- teristics affected the relationship between state and civil society. For states, the crisis meant a growing reliance on credit supplied by global capital markets, and this in turn caused the overarching policy concern to be signaling creditworthiness (Maxfield, 1997: 44). Signaling was accomplished, for example, through balanced budgets, low inflation rates, prompt service payments on debt, deregulated financial markets, liberalized trade sectors, and the demonstration of political stability. The crisis resulted in a transformation of the relations between state and civil society through the implementation of new, outward-oriented forms of economic restructuring. This change has been adequately captured by the notion of the “national competition state” (Hirsch, 1995; Cerny, 1999; Soederberg, 2001a), a state in which all policy formulations (e.g., social and welfare benefits) are subordinated to the goal of attracting and retaining the most capital investment possible. Ideologically, states must attempt to resolve the inevitable socioeconomic 108 LATIN AMERICAN PERSPECTIVES and political conflicts arising from the shift toward a competition state in a manner that appears to represent the interests of society at large as opposed to particular interests. To reproduce its particularized position, the state must conceal or at least legitimize the class-based nature of its policy formulations. Naturally this is not easy, particularly within the framework of the wider neoliberal paradigm, which involves the state’s explicit assistance in shifting wealth, power, and security away from the bulk of the working poor. The political and ideological tenets of the extended state become compli- cated during times of crisis. To be sure, economic restructuring and the rise of the competition state have effectively deteriorated the specific class compromise between the state, powerful sections of labor, and the bourgeoisie. This social pact had its ideological expression in the so-called revolutionary myth,3 while its political manifestation was an authoritarian regime based on the one-party rule of the Partido Revolucionario Institucional (Institutional Revolutionary party—PRI) and corporatism. The material basis of this pact was substantial protectionism and state ownership, which allowed the state not only to act as employer but also to grant capitalists cheap credit and to offer goods and services at subsidized prices. Because of the highly exclusionary nature of capital-intensive industrialization, corporatism was a key element in limiting working-class identity and political activity to collec- tive bargaining. Moreover, it served to break down the solidarity of labor by dividing working-class interests between official unions4 and the majority of underemployed Mexicans. Within the framework of the crisis of the import- substitution-industrialization model and the subsequent shift toward export production, the political and material bases of this pact also entered into an ideological crisis, opening new and intensified struggles within both the state and civil society. As the passive revolution from a developmental state to a competition state took place, the lack of an institutionalized social compromise inevitably led to difficulties in maintaining and reproducing the ideological and political predominance of the ruling classes in civil society. Con- sequently, new political content had to be fabricated to reproduce the bourgeoisie’s control over the development of the capitalist relations of production in the wake of the crisis.

MEXICO’S NEOLIBERAL PASSIVE REVOLUTION

The balance-of-payments crisis of 1982 created policy constraints for the state in the form of structural adjustment programs of the International Mon- etary Fund (IMF), not to mention its growing dependency on external forms of credit from private financial institutions. Taken together, these events Soederberg / FROM NEOLIBERALISM TO SOCIAL LIBERALISM 109 considerably narrowed its room for maneuver in navigating the troubled waters of heightened class struggle in both the state and civil society. More- over, to reverse the declining profitability of the import-substitution- indus- trialization model, the economy required both large infusions of capital investment and a shift to an export-promotion-industrialization mode of capital accumulation. The implementation of this scheme meant political and ideological reorganization of the extended state. The restructuring of the relations between the state and civil society was marked by the transformation from a developmental state to a competition state and the dissolution of the political and material basis of the class compromise that underlay the former expression of political and ideological domination within the import-substitution-industrialization model. Ideologically, the state leaned heavily on the neoliberal belief in the rationality of the market over state-led decisions. Poli- tically, it adhered to the principle of debt as social discipline that was mirrored in President Miguel de la Madrid’s (1982-1988) “stabilization policy.”5 The gist of the new political content of neoliberal ideology was that not only was the self-regulating market more efficient and socially just than state intervention but also state involvement in the economy was an encroachment on the rational free-market system, disrupting its self-equilibrating tenden- cies and prolonging its natural healing processes. In the absence of a social pact, neoliberalism could both justify and neutralize the class-based bias of economic modernization. Put differently, in the presence of escalating class- led struggles and rising levels of poverty, neoliberal ideology was to assist in depoliticizing the new forms of intervention that were to accompany the stabilization program. In truth, the structural-adjustment-led restructuring was a capitalist strategy directed at overcoming the effects of the crisis while excluding the interests and demands of the majority of working- and middle- class Mexicans. The neoliberal structural adjustment programs assisted in declassing the restructuring of the extended state by attempting to gain the masses’ consent to the abandonment of protectionism in order to attract foreign capital investment. This restructuring was accomplished behind the ideological shield of the superiority of market rationality over political strategies. More concretely, the structural adjustment programs supported the implementation of deregulatory schemes in the areas of finance and trade and the swift privatization of a great number of state enterprises. The distribu- tional wreckage of the structural adjustment and basic restructuring programs affected the usually suffering lower classes and the middle classes. The guiding political principle of the state’s neoliberal passive revolution was debt as social discipline (Soederberg, 2001b). With this principle the state effectively justified or, better, explained away its intervention by interiorizing self-created international constraints (Grinspun and 110 LATIN AMERICAN PERSPECTIVES

Kreklewich, 1994) such as external oil shocks and the liberalization of the economy (Banco de México, 1987: 21). Vindicated by neoliberal ideology, the idea of debt as social discipline was intended to produce consent of the masses to explicitly class-biased policy choices geared toward catering to capital interests for the purpose of attracting and retaining capital inflows (for example, maintaining extremely high interest rates, increasing internal debt to continue to subsidize capitals) while axing antipoverty initiatives such as the Sistema Alimiento Mexicano (Mexican Food System—SAM) and index- ation programs. The state was attempting to discipline Mexicans to accept the “natural” trajectory toward an export-promotion-industrialization strategy. To attract and retain capital inflows, the state had first to attend to the demands of capital, particularly where it was complaining of too much state intervention, at the same time as demanding easy credit access, low rates of taxation, subsidized goods and services, and so on. Second, given the impor- tance of signaling, it had to boost labor’s productive capacity at the lowest political cost possible by directly dealing with the rising tide of social discontent from the working class and effectively disciplining labor to accept the “new competitive reality.” Liberalization, privatization, and deregulation schemes reflected the attempt to restructure the social relations of production, that is, the relations between the state, capitalists, and labor, so as to guarantee the expansion of capital accumulation. Supported by the ideology of neoliberalism, these strategies were designed to replace traditional state forms of regulation with the appearance of rationality of market forces. However, because of the country’s ongoing economic malaise and the absence of a political and material social pact with powerful sectors of labor and capitalists, these attempts to reorganize the extended state via neoliberal ideology and the principle of debt as social discipline were to fall short of their aims. A striking example of this failure was the rapid and extensive privatization of public enterprises. Aside from its obvious signaling effects, the objective of this privatization was to push powerful sectors of labor out of corporate structures into the private realm. Indeed, in several cases strikes have been used as the pretext to sell state enterprises and destroy unions simultaneously (McCaughan, 1993: 21). A paradox of privatization surfaced at this point. On the one hand, the forging of new methods of mediating struggles via decentralization schemes shifted class-based conflicts within the federal state to the state and municipal levels where they could be dealt with more effectively. In the process, the state was dispersing the centralized power of the official unions, particularly the Confederación Nacional Campesina (National Peasant Confederation—CNC). At the same time, privatization effectively pried open new spaces for social forces of resistance within civil Soederberg / FROM NEOLIBERALISM TO SOCIAL LIBERALISM 111 society. For example, the primary goal of the new agrarian reform law at the end of 1983 was representative of the new relations between the competition state and labor—the privatization of state-labor relations. This objective was accomplished by eroding the material basis of the former pact. At the same time, however, there were attempts made not only to depoliticize the political uprisings of the peasants by decentralizing their powers to the state level but also to force them to seek alliances directly with capitalists as opposed to the state. The upshot of this was the creation of new and broader scope for struggles within civil society that were mobilized around the key issue of repudiat- ing the political content of the neoliberal passive revolution. These privatization schemes were targeted at both attracting capital to Mexico and disciplining labor to accept the dictates of the market. All this seems to suggest that they essentially undermined the neoliberal passive revolution by strengthening the social forces within civil society that were directly challenging those values and ideas. Kees Van der Pijl (1998) refers to this process as the “discipline of capital.”6 The intensifying class-led conflicts and expressions of counterhegemony within civil society were strengthened by the palpable failure of the markets to bring about sustained growth. One of many examples of social injustice of the economic modernization program was the fact that, despite their having swallowed the bitter pill of austerity, the majority of Mexicans found that the buying power of their minimum wages had declined by some 40 percent between 1980 and 1987 (MacEwan, 1990). In short, overall economic growth was not achieved (see Álvarez and Mendoza, 1993). More specifi- cally, domestic debt was rapidly rising while capital investment continued to contract (IMF, 1992). The policies of debt restructuring based on promarket neoliberalism were not gaining Mexicans’ consent, for high unemployment, falling real wages, and increasing political conflict were far from the smooth path of neoliberal tales (Pastor, 1999). The economic effects of the modernization policies, particularly exposure to ever-increasing international competition as a result of trade liberalization without the security of government subsidization, also distressed capitalists. At the same time, capital inflows were insufficient to support the debt restructuring policies. This discontent was reflected in the federal elections of 1988, when much of capital shifted its support to the right-wing, probusiness Partido Acción Nacional (National Action party—PAN) and a large number of working- and middle-class Mexi- cans transferred their allegiances to the Partido de la Revolución Demo- crática (Party of the Democratic Revolution—PRD). In sum, the failure of Mexico’s neoliberal passive revolution was rooted in the inability of the state to mediate new expressions of class struggle as the extended state underwent a transformation toward an export-promotion- 112 LATIN AMERICAN PERSPECTIVES industrialization form of capital accumulation. Since the state is a moment of the social relations of capitalist production, it not only is shaped by these struggles but also cannot immediately reconcile the effects of a crisis in a smooth, frictionless manner. It does, however, transfer (or politicize) the problems within civil society to the political institutions of the state, for the latter have assumed responsibility for capitalist regulation. Furthermore, these political institutions can regulate capitalist reproduction only to the extent that capital is able politically to subordinate them to its needs (Clarke, 1988: 419-420). In the absence of both a hegemonic bloc and an intercon- nected class compromise, the ability of capital and its managerial classes (the political elite) to maintain their ideological and political domination over the subordinate classes in civil society became quite problematic.

REINVENTING NEOLIBERALISM: MEXICO’S SOCIAL-LIBERAL REVOLUTION

The Salinas administration aggressively pursued further integration of the Mexican economy with that of the United States. This campaign was moti- vated by the need to remedy the shrinking of capital inflows by legally lock- ing in the U.S. commitment to transform Mexico into its industrial hinterland via an annexation to the larger Canada-U.S. free-trade zone. In this way, the Mexican dominant classes came to view the North American Free Trade Agreement (NAFTA) as a cure-all for the country’s economic malaise. This panacea was not, however, a matter of trade and market access but rather, as the IMF itself noted, a matter of capital movements, transfer of technology, and location of production, and it was anticipated that it would lead to signifi- cantly greater welfare benefits (IMF, 1993: 18-19). However, because of the nature of Mexico’s productive structure and capital flows, the trade pact not only ensures that the usual capital class will reap the rewards of a deeper dependency on the United States but also that economic polarization among the working population will continue to increase. There are at least two salient reasons for this increase in socioeconomic inequality. First, a process of maquiladorization has characterized this economic integration or, more plainly, deindustrialization. As Kathryn Kopinak (1994: 150-151) has suggested, the maquiladoras provide fewer jobs than the number lost from Mexican-owned industry and agriculture, and those jobs are comparatively unskilled and poorly paid. This means not only that workers have reduced purchasing power but also that the internal domestic market has shrunk with the shift toward export production. Furthermore, the overlap in the U.S. and Mexican export markets comes with a customized time bomb. Soederberg / FROM NEOLIBERALISM TO SOCIAL LIBERALISM 113

As exports to the United States have doubled, imports from it have at least tripled, which has predictably led to more debt and current-accounts problems— particularly since Mexico uses borrowed funds to pay for its imports. Second, the United States and Mexico are competing with each other not only in the same export markets but also in the same capital markets. Each country attempts to provide optimal credible investment environments, including low taxation and social benefits, so as to attract the highest amount of capital investment possible from the international financial markets (McConnell and MacPherson, 1994). Here as elsewhere, Mexico has been fighting a losing battle. For one thing, capital investment remains inadequate vis-à-vis the existing public expenditure in the economy. For another, given the high interest rates and the deregulation of the financial sector, capital flows are often speculative in nature, and this has of course been detrimental to Mexico’s productive structure. To illustrate, while foreign direct investment production facilities increased by 57.6 percent from 1989 to 1993, the more mobile portfolio investment rose by more than 8,000 percent, repre- senting 86.8 percent of total foreign investment in Mexico (Pastor, 1999: 213). Speculative inflows render the economy vulnerable to their reversal, as in the case of the 1994-1995 peso crisis. More fundamentally, they increase the need for the state to assign high priority to maintaining a favorable investment environment and particularly political stability in order to sustain its large current-account deficits. Within the framework of NAFTA, Mexico’s trump card was its abundance of cheap and well-disciplined labor, and therefore keeping a tight lid on heightened class conflict was seen as paramount in encouraging capital investment to maintain the overextended line of credit upon which the viability of restructuring depended. A contradiction emerges here. First, the political and economic elite looked to continental rationalization to help overcome the barriers to capital valorization, which depended for success on the attraction and retention of high levels of largely speculative capital inflows. Second, continental rationalization’s tendency toward the maquiladorization of the social relations of production (Soederberg, 2001b) inevitably aggravates the already high levels of political instability and socioeconomic fragmentation and thus perpetuates the threat of capital flight. This contradiction lies at the heart of Mexico’s passive revolution of social liberalism. It goes without saying that the absence of the political and material basis for a social pact has made it increasingly difficult to reinforce this continental rationalization, especially in the face of intensifying socioeconomic misery and the rise of decentralized counterhegemonic movements. It will be recalled that the state’s monopoly of legitimate violence is not sufficient to 114 LATIN AMERICAN PERSPECTIVES maintain the hegemony of the ruling classes in the long run. Physical force needs to be complemented by a strategy of gaining active consent through the self-organization of the masses, starting with civil society and resonating throughout the state. In this sense, the political content of social liberalism was directed toward preventing the development of a revolutionary adversary by decapitating its revolutionary potential (Showstack Sassoon, 1982). As had its predecessor, social liberalism had both political and ideological dimensions, both of which mirrored the state’s involvement in the reorganization of the social relations of exploitation. By promoting social liberalism as a “third way” floating somewhere between two previously failed passive revolutions, neoliberalism and corporatism, the dominant classes sought to repackage the neoliberal ideology regarding the superior rationality of the markets over the state. President Salinas and his cohorts set to work to convince Mexicans that social liberalism would miraculously lead to justice, pluralism, and democracy (Salinas de Gortari, 1990). Politically, social liberalism supported the project of continental rationalization via currency devaluations, high interest rates, further deregulation in the areas of finance and trade, privatization schemes, and PRONASOL. The significance of the latter lies not simply in its attributes as a social bromide but, more important, in its qualities as a virtual social pact whose primary objective was to delegitimize and depoliticize the counterrev- olutionary activities of groups in civil society so as to prevent them from exerting influence on the forms of domination that supported capital’s trajectory toward deindustrialization within the framework of NAFTA. The adjec- tive “virtual” refers to the fact that this social pact entailed not a political but only a material basis. Unlike the social pact found in corporatist structures between powerful sectors of labor and capital, these relations effectively changed in the framework of the new extended competition state. As noted earlier, because of economic restructuring, labor, which was mediated and modified within the formal corporatist structures of the state, was now forced to seek alliance directly with capitalists in civil society. At the same time, PRONASOL possessed a substantial material basis, its spending levels exceeding the total federal government investment during the Salinas administration (Cornelius, Craig, and Fox, 1994: 8). Although the state attempted to portray social liberalism as distinct from and more socially just than neoliberalism, it was nothing more than a modifi- cation of neoliberal ideology. For example, the neoliberal belief that state intervention was inimical to the successful functioning of the self-regulatory market was to be bolstered with globalization orthodoxy. The globalization argument was that international financial markets, the footloose transnational corporations, and information technology had become so Soederberg / FROM NEOLIBERALISM TO SOCIAL LIBERALISM 115 overwhelmingly complex and omnipotent that they were beyond the control of states. Taken together, neoliberal ideology and a fatalistic understanding of the forces of economic globalization as unstoppable assisted in legitimiz- ing maquiladorization as an inevitable side effect of Mexico’s necessary economic integration with the United States. In this context, the state appears magnanimous in its attempts to assist disadvantaged groups in civil society through such policies as PRONASOL. Herein lies the distinguishing feature of social liberalism—that even in the face of the omnipotent and inescapable forces of globalization, the state will make Herculean efforts to care for individuals pushed to the wayside. More concretely, social liberalism served as the ideological backbone for such public relations gimmicks as concertación, which was aimed at achiev- ing social cohesion within civil society as well as within the state apparatus— for example, between the PRI and some of its opposition.7 What is more, under the banner of “restructuring with a human face,” the government attempted to package itself not as a distributor of last resort but instead as a benevolent team leader who would guide Mexicans in the new international competitive race. The superficial shift from neoliberalism to social liberalism also involved a change in semantics; for instance, instead of economic modernization the buzzword of the 1990s was “social modernization.” From the perspective of the foregoing analysis, the latter, of course, is an oxymoron. On the one hand, “social” refers to the claim of the alleviation of extreme poverty, while, on the other, “modernization” implies increasing poverty through deeper economic integration with the United States. A case in point is the government’s own conservative and loosely defined notion of poverty,8 according to which 26 percent of the Mexican population in 1998 were living in conditions of extreme poverty (SEDESOL, 1999). A key political facet of the social-liberal passive revolution was PRONASOL. It is difficult to describe it adequately because of its sheer size and multifaceted character, both of which are necessary for gaining consent while crushing counterhegemonic movements. Two primary orientations of PRONASOL, however, may be briefly outlined to show that it is a virtual social pact. The first objective is universal access to services linked to the full exercise of Mexican constitutional rights, particularly education, health, social security, and housing. Notwithstanding the fact that they were never extended to those who were in dire need of these rights, the absence of income distribution via progressive taxation makes this aim nothing more than an exercise in rhetoric designed to maintain the status quo. The second objective is the eradication of extreme poverty. According to the government, this means targeting social groups whose standard of living prevents them from having access to the benefits of “development” (SEDESOL, 1999). In 116 LATIN AMERICAN PERSPECTIVES light of the fact that “development” is synonymous with maquiladorization and thus with constant increases in income inequality for well over half the population, this policy objective is really about co-opting the revolutionary groups that are resisting and challenging the elites’ definition of reality. Initially based in and administered from President Salinas’s office (the “human face”), the PRONASOL channels various sums of money into cheap food, loans to peasants and women’s micro-companies, funds for schools, university scholarships, property titles for urban squatters, the construction of hospitals and the funding of infrastructure projects, such as electrification, dams, and the draining of lakes, and so forth. This so-called antipoverty program is not an effort to correct socioeconomic injustices of the market but a response of the dominant classes to the discontent associated with debt-led restructuring. Rather than being designed to serve as a social safety net, it is intended to act as a disciplinary mechanism to instill values and goals similar to these of the ruling classes in civil society. This is evident in the fact that it rests on “workfare” as opposed to welfare. It affords the PRI some political legitimacy through its decentralizing methodology, which is in reality part of a larger attempt to privatize the social relations of production. In the state’s attempts to infuse these new decentralized pockets of insurgency with political content, a participatory character has been promoted for these projects so as to produce the appearance of a benevolent state, not to mention creating the necessary infrastructure for continental rationalization. Not surprisingly, these programs have forced poor peasants and workers to work at a minimum cost to the state, thereby temporarily and superficially alleviating the most painful consequences of “modernization” (Katarina, 1997). Many writers have suggested that PRONASOL represents a form of neopopulism in that it projects the president as the champion of a new political clientele, namely, the country’s urban and rural poor. This in effect also seems to support the political strategy of preserving centralized presidential rule (see, e.g., Kurt, 1996; Dresser, 1994; Bailey, 1994). There are two problems with viewing PRONASOL in this way. First, although at one level it does represent a political strategy of the president to maintain control over the electorate, at a deeper level there is a more complex mechanism at work—the establishment of new forms of economic exploitation and corresponding forms of political and ideological domination. Second, treating PRONASOL as an exercise in populism underestimates the significance of counterhegemonic movements vis-à-vis the passive revolution of the extended state. The common denominator of these two weaknesses is a structural-pluralist understanding of state-civil society relations. These writers see centraliza- tion and decentralization occurring within the larger interactions between a neutral, independent state and a civil society separated from economic Soederberg / FROM NEOLIBERALISM TO SOCIAL LIBERALISM 117 relations of exploitation. The question that surfaces here is whether civil society can exist independent of the power structures of capitalist society. As argued above, if one accepts that the social relations of production are essentially fluid in nature, then civil society cannot exist as an airtight space floating somewhere between the capitalist market and the bourgeois state. Fur- ther, when the capitalist state is viewed as represented by a person such as the president or a political party, neopopulism seems to dovetail with “restructuring with a human face.” This in turn falsely associates public policy with the gatekeepers of power as opposed to the source of power—capital accumulation. A more fruitful approach to an understanding of the political and ideological significance of PRONASOL would be to contextualize it within a state that is seen as an integral moment of the social relations of capitalist production, involving exploitative and unequal relations between labor and capital. Put differently, because the relations between the state and civil society are not structures but fluid in nature, passive revolutions permeate both spheres to promote the continued expansion of capital accumulation. Without taking this analytical step, the meaning of PRONASOL becomes befogged, for the structural-pluralist approach neglects to address the question of why the state itself has played a key role in inducing decentralization of political conflict. Parallel to the transformation from a developmental state into a competition state there is, as we have seen, a noticeable delegation of responsibility for dealing with class-based struggle and discontent to the state and municipal levels of government. This decentralization is propelled by the ruling classes’ hope of diluting the power of counterhegemonic movements. Particularly when it is combined with the discourse of the ruling class’s notion of democracy, decentralization is the most effective way of crushing and controlling these grassroots struggles. At the same time, the federal state continues to control over 85 percent of public revenues and a monopoly of the legitimate use of force. This implies that in the last instance it comfortably retains con- siderable power over the other levels of government. More important, the interests of the elites—in, for example, productivity and economic growth in these differing institutional spheres of class rule—are not in opposition to those found in Mexico City. In 1992, as a precondition for the bilateral trade agreement between Mex- ico and the United States, Articles 27 and 123 of the Mexican Constitution were amended. These changes referred to the right of the Mexican state to full ownership in strategically important areas of both natural resources and infrastructure. These legal modifications reveal further restructuring of the relations between the state, capital, and labor through the privatization or marketization of the social relations of production. For one thing, the Salinas 118 LATIN AMERICAN PERSPECTIVES administration disaggregated the labor movement and replaced the old corporatist control via national bureaucracies such as the CTM and the Congreso de Trabajo (Labor Congress—CT) with industry unions and even company unions (McCaughan, 1993: 21). For another, parallel with the implications of the reprivatizations of the banks, the repeal of the SAM was taken one step farther by the amendment of Article 27, which protected among other things the right to possess a holding on communal land (ejidos), thus annulling significant aspects of the revolutionary myth. All this seems to suggest that the state was continuing its attempts to depoliticize labor and peasant organizations while co-opting or destroying opposition forces that could no longer effectively be controlled in terms of former expressions of political and ideological domination such as corporatism. These decentralization moves have led to a substantial deterioration of the material standard of living of unionized workers; for example, real wages fell by nearly 25 percent between 1994 and 1996 and did not stop declining until mid-1997 (Pas- tor, 1999). Ironically, as a direct consequence of continental rationalization and decentralization, labor is becoming more unified. Solidarity among labor groups is on the rise. This has led to a plethora of decentralized, informal forms of counterhegemony within civil society. Thus, in the absence of a political basis for class compromise and a corresponding set of formal political institutions to modify and mediate class struggle in decentralized spaces of the extended state, PRONASOL may be regarded as a means whereby the ruling classes maintain and reproduce their hegemony. This is accomplished through the state’s goal of building alliances with displaced unionized workers and peasants. In doing so, it encourages these groups to restrict their struggles to the framework of capitalism and its political forms of regulation. Through the competition for scarce material resources it also seeks to frag- ment the sense of community and solidarity at the local level. In sum, the ideology of social liberalism and the selective material accommodation of PRONASOL assisted in preventing the domination of the ruling classes from being challenged during the shift to an export-promotion-industrialization mode of capital accumulation. It remains highly questionable whether the ideology of social liberalism and PRONASOL have resolved the paradox of economic integration and increased human misery. Indeed, the growth and power of counterhegemonic projects within civil society, of which the Zapatista uprising in 1994 is but one spectacular manifestation, are revealing that the reproduction and expansion of capital accumulation rest on human compliance (see Van der Pijl, 1998). These heterogeneous, decentralized social movements are making it increasingly difficult for the ruling classes to sell the system of beliefs and values underlying sustainable economic growth and low inflation in the name Soederberg / FROM NEOLIBERALISM TO SOCIAL LIBERALISM 119 of continental rationalization. For now, PRONASOL remains a key component of their attempts to discipline counterhegemonic struggles while legiti- mizing increased human suffering as a natural by-product of modernization.

CONCLUSION

This article has attempted to make sense of PRONASOL from a different angle. Following Gramsci, it began by suggesting that political and ideological restructuring of state power is necessary if the bourgeoisie is to retain its dominance, particularly in times of crisis, when its hegemony is weakened. From this premise, it has argued that PRONASOL is a moment of a passive revolution of the extended state, as opposed to being a means of poverty alleviation or a construction of stronger state-civil society relations from above. PRONASOL has been designed to appease the basic material demands of those most affected by the increasing socioeconomic inequality brought about by capitalist strategies of continental rationalization. It is aimed at intimidating impoverished Mexicans into accepting the socioeconomic side effects of restructuring as if they were some sort of natural and logical consequence of self-equilibrating (globalized) market forces. An irony has accompanied PRONASOL and the wider movement of social liberalism. Despite increasing expressions of decentralized struggles that reveal a rejection of the dominant classes’ notion of reality, the state has attempted to distort and then package this phenomenon as something symbolizing increasing democracy. Through Mexico’s second, social-liberal passive revolution, the state has transformed itself into a benevolent partner willing to enter into a material compromise with poverty-stricken Mexicans. This mystification of the state has had the effect of portraying the demands of the disenfranchised as selfish, inflexible, and irrational reactions to the ostensibly necessary economic restructuring. Not surprisingly, anyone who refuses to cooperate with the state and join hands with capital to work toward the modernization of the Mexican economy has been labeled as an “enemy of democracy.” Likewise, through its passive revolution the state has attempted to signal to its international creditors and investors that the country’s attempts to become a more open, market-oriented, and liberalized economy have been accompanied by political modernization. A favorite bedfellow of these tales of democratization processes at work in Mexico has been the argument surrounding increased plurality within the political party system (see, e.g., Shandlen, 1999), particularly the recent downfall of the PRI and the election of the right-wing entrepreneur Vicente Fox. While it is true that there have been major changes 120 LATIN AMERICAN PERSPECTIVES in the party system, we must not lose sight of the fact that this political modi- fication represents a reshuffling among the dominant elite rather than a societal transformation toward more inclusionary politics based on economic justice. Put differently, although many are vying for the captain’s chair, not only does the struggle for power remain between the political and the economic elite but also, and more important, it is being fought aboard a capitalist ship whose course has been charted for the more profitable lands of what is known as NAFTA. The increase in decentralized social movements and the seeming plurality of the Mexican party system are nothing more than mani- festations of the reorganization of state power in the face of economic restructuring that has led to increased political oppression of the poor instead of their liberation. Within this convoluted world marked by false democracy and unjust economic restructuring, one hope remains unclouded: individuals and groups aiming to demystify and dissolve the passive revolutions of the ruling classes have become stronger. Their strength stems not only from an iron resolve to cling to their right to human dignity but also from the inherent contradictions within the capital relation itself. Despite the attempts of social liberalism and PRONASOL to thwart the aims of an active revolution from below, that this may become reality seems more than mere wishful thinking.

NOTES

1. For example, on the basis of a per annum average between 1980 and 1992, the formation of fixed gross capital in the private sector was 2.3 percent compared with the crescent of active financial stock at 6.0 percent (Bank for International Settlements, 1995). 2. Credit rating agencies serve financial markets by evaluating and publishing indicators of default risk. A credit downgrade imposes discipline on spendthrift borrowers by making credit more expensive or, worse, cutting off additional loans or refusing to roll over existing ones. 3. Mexico’s revolutionary myth, or revolutionary nationalism, was a fusion of nationalism and a commitment to socioeconomic transformation that included some of the following fea- tures: a steady belief in the “trickle-down” principle; acceptance of the “cruel dilemma” (that is, the priority of industrialization/economic modernization over democracy); the belief that the PRI and government corporatist structures represented the interests of average Mexicans (peasants and workers), who were seen to be the main force in the revolutionary overthrow of the dic- tatorial regime of Porfirio Díaz (1880-1910); and a mistrust of high levels of foreign ownership. In this light, the import-substitution-industrialization model, which was based on capital- as opposed to labor-intensive production so as to reap higher profits more quickly, was legitimized by capital by playing on the anti-imperialist sentiment of the revolutionary myth, with such rhe- torical programs as the Mexicanization policy, which requires that Mexican nationals hold majority ownership of enterprises in key sectors of the economy (see Hellman, 1979: 61-62). 4. The three official unions are the Confederación Nacional Campesina (National Peasant Confederation—CNC), the Confederación de Trabajadores Mexicanos (Mexican Workers’ Confederation—CTM), and Confederación Nacional de Organizaciones Populares (National Soederberg / FROM NEOLIBERALISM TO SOCIAL LIBERALISM 121

Confederation of Popular Sector Organizations—CNOP). Both the CNC and the CTM are usually represented by highly corrupt leaders known as charros appointed by the PRI politicians, while the CNOP is comprised of middle- and upper-class Mexicans and has more influence with the PRI than the CNC or the CTM. In contrast to the membership of the CNC and the CTM, the members of the CNOP are formally part of the official party. 5. In brief, the program called for strengthening of financial policies and liberalization of exchange and trade controls; it also provided for a large initial devaluation followed by frequent adjustments in the exchange rate based on projected inflation. This was to be accomplished by assigning a high priority to holding down current and operating expenditure, increasing productivity, eliminating or reducing subsidies to both the private and public sectors, and cutting back the growth of the wage bill through a freeze in hiring and the pursuit of a restrained wage policy in the public sector (IMF, 1983: 2). 6. According to Van der Pijl, there are three overlapping modes of imposing capitalist discipline: the original accumulation and proletarianization, struggles in production and the historical proletariat, and struggles for survival (1998: 31). 7. Concertación arose from the PRI’s loss of absolute majority control of the Chamber of Deputies in 1988, which compelled it to seek minority support from the PAN. Although it ended up failing, the attempt of both the PAN and the PRD to form a coalition during the 2000 preelection campaigns signaled the ongoing absence of a hegemonic bloc within the extended state (see Financial Times, September 20, 1999). 8. The vagueness of the term extreme poverty is evident in the following working definition: extreme poverty refers to those individuals who do not have sufficient resources to have access to the goods contained in the official list of basic products that will allow for the adequate perfor- mance of their activities (SEDESOL, 1999).

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