José G. Vargas-Hernández

Mexico State’s Economic and Political Transition:

From Entrepreneurial State to State of Entrepreneurs

INTRODUCTION

Mexico is a highly centralized country with a powerful government, no reelection or, until recently, strong, open political competition. Since independence and for the last two centuries the dominant political system in Mexico has been authoritarian and presidential. Starting with the governments emerging from the Mexican Revolution (1910-17), it settled on a system of dictatorship in which the dominant party monopolized political representation and a deformed presidency. Krauze denominated the Imperial Presidency, weakening the legislature’s ability to carry out its functions and duties, and diminishing judicial power. Various forms of patriarchal power represent yet another feature of the Mexican government before and after the Mexican Revolution.

THE MEXICAN ENTREPRENEURIAL, PRE-PRESIDENTIAL STATE

Mexican economic nationalism emerged as a result of promoting public and private Mexican capital to avoid foreign investment, mainly by the United States. The Mexican State was characterized by an historical distrust of capitalism and a belief in the ability of the government to intervene and regulate economic affairs through its explicit constitutional mandate (Grier and Grier, 2000: p. 245). However, from the 1930s and until the 1970s a model of import substitution industrialization (ISI) favored private Mexican investments and was also believed to benefit the people. The Mexican public sector enlarged the number of publicly owned corporations. In 1982 state owned enterprises produced 14 percent of gross national product (GNP), received net transfers and equal subsidies of 12.7 percent of GNP and represented 38 percent of investment in fixed capital.

In the name of the great conquests of the Mexican Revolution, during the time of the Mexican welfare state, organizations were constituted that corporately grouped militias, peasants, working class and popular sectors which exerted political control over the state’s party bureaucracy in power and the „charro“ (Mexican horsemen) leaders. The „charrismo“ (a scornful term for union leaders) forced workers to conform to the rules of the official party, the Institutional Revolutionary Party or Partido Revolucionario Institucional (PRI). The workers were pressured and threatened with wage reduction, loss of employment, benefits, agricultural credit, increase in urban and rural poverty, etc., to guarantee their loyalty and a reserve of votes.

Although since 1929 all the Mexican presidents came from the Institutional Revolutionary Party (PRI), economic policy did not follow a regular and coherent pattern of policy making. Nevertheless, during the period of the hegemonic PRI, the government cultivated a degree of social consent that avoided extreme levels of repression in what has been called the „perfect dictatorship“. In line with the so-called meta-constitutional powers, the President of Mexico was also the true head of the PRI and had, as his duty, designed national leaders and candidates for popular election. The Mexican president had both extensive constitutional and unwritten supra-constitutional powers and was committed to the retention of his political power during his mandate. The continuation of his power required him to follow the „ritual“ of choosing his successor.

As the ruling political party, in the sense that it dominated the country’s political life, the PRI held power in the federal executive branch of the Mexican government for 71 years. It was the center of the Mexican political system and used political mechanisms to control workers, peasants, the popular sector and organizations, such as „cuadillismo“ (leadership), corporatism, etc. Also, the PRI enforced institutional control mechanisms over the electoral process. The PRI’s corporatism focused on workers and peasants whom it promoted but did not liberate, guarantying them patrimonial rights and, with the pretext of institutionalizing the Mexican Revolution, identifying the causes of democracy and social justice with trickery. Its success in both areas was very poor, although they did maintain social stability. Each president in turn appointed his successor through a phenomenon known as „tapadismo“ (overcoat candidate) and „dedazo“ (finger pointing) to signal who was chosen.

Such analysts as Abascal and Macías (2000b) identified three stages in the PRI’s evolution: Hegemonic, bipartisan, pluripartisan. During the hegemonic stage, from 1929 to 1979, the infinitely superior PRI dominated over the other political parties and maintained total control of political power. During the bipartisan stage, from 1979 to 1985, the PRI maintained dominance over political parties of the opposition but lost seats in municipal and state governments to the National Action Party or Partido Acción Nacional (PAN). During the pluripartisan stage, from 1988 through to the end of 2000, it opened up political competition between the PRI, PAN and the PRD (Partido de la Revolución Democrática or Democratic Revolution Party) which shared power in municipal and state governments.

The effectiveness of the „perfect dictatorship“, according to Vargas Llosa, or to the presidential monarchy (Ortiz Pincheti, 2000), was best demonstrated during an era of prosperity which coincided with a period of stabilized development, from 1940 to 1970, and a period of shared development, from 1970 to 1982. During both periods there were great advances in social policy, although poverty and social inequality were never eradicated, and a strong middle class emerged and claimed its place in political participation. The „perfect dictatorship“ was underpinned by the shedding of the blood of the marginalized Mexicans. The State model, which distributed power and had emerged out of the Mexican Revolution, culminated in a crisis that degenerated into institutionalized violence.

At the end of Echeverría’s period (1970-76), after 22 years of monetary stability and sustained growth, the peso (Mexican monetary unit) was devalued, an economic crisis began, and the constant tensions between entrepreneurs and government officials became crucial elements in initiating change. The entrepreneurs founded the Consejo Coordinador Empresarial (Entrepreneurial Coordinating Council)(ECC) to defend their interests from State intervention. In 1982 in the middle of a general economic crisis caused by a fall in oil prices, President López Portillo nationalized the banking system, devalued the peso, and increased interest rates. The country defaulted on practically all payments causing a fracture in the pact between the State and the ECC.

TRANSITION OF THE MEXICAN STATE: PRE-PRESIDENTIALIST NEOLIBERAL RESTRUCTURING

Much of Latin America experienced financial crisis in the 1980s and the mid-1990s. In Mexico, intense economic crises occurred in 1976, 1982, 1987 and 1994-95, with intervening periods of mild economic recovery. Mexicans suffered periods of dramatically high inflation, external imbalances, devaluation, currency flight, increasing unemployment and declining purchasing power.

Since the beginning of the eighties the pressures on Mexican creditors to guarantee payment of external debt resulted in the creation of an instrument, the so-called „Washington Consensus“, which imposed infallible neoliberal rule over a free market and a democratic system with free elections. Thus the „neoliberal agenda“, which proposed structural adjustment programs and economic stability, was imposed by international financial organizations, such as the World Bank, the International Monetary Fund and the Inter American Development Bank, as a condition for negotiating the Mexican „debt crises“ of 1982, 1987 and 1994-95.

Therefore, after the 1982 crisis, Mexico entered into a painful, distressful, and controversial period of state restructuring. The changes included: economic reorganization; national market openness; elimination of commercial barriers; elimination of price controls and subsidies; privatization of public enterprises and state property; reduction of social policy expenses; free money exchange, and also wide political reforms and administrative modernization. It abandoned the import substitution model and called economic intervention in the state into question.

The main thrust of the reforms encouraged in Mexico was the development of a competitive, broad-based export sector of nontraditional goods. Mexico joined the General Agreement on Trade and Tariffs (GATT) in 1986 and became an exporter of manufactured goods. The strategies adopted for the design of the Mexican State, as it was for other states, was reduction of state structures and facilities, privatization of state owned enterprises, and economic deregulation.

With the introduction of these reforms the Mexican State began to loose its capacity to function as a nation, although the State maintained that there are high indicators showing that the reforms benefited the owners of capital. These reforms to the structure of the Mexican State’s apparatus make sense out of its transition and change from the welfare state model toward a neoliberal state model. This transition and change are understood, in Roitman’s terms, as forms of behavior, loss of centrality in politics, loss in the ability to build a sense citizenship, transformation of politics into one electoral technique, and an increase in market problems. Also, a loss of ethics and principles in the work of politicians and political institutions evidently appeared in Mexico during the government of Miguel de la Madrid (1982-88), continued with Salinas de Gortari (1988-94), and also with Zedillo (1994-2000), and now with Fox (2000-2006), (Aviles and Velazquez, 2000).

But the crisis of 1982 was also meaningful as the „crisis of hegemony“ which was present in the old alliance between the State and ECC who represented national capital and were the direct beneficiaries of economic policies based on the import substitution model. Nationalization of the banking system was the main event that provoked the rupture between the political and entrepreneurial hegemonic blocks and their representatives, the politicians and government officials from the party of the State and the factions that controlled capital. As it is said by Fazio (2000a), they were living in one tortuous lover relationship of subterranean blurred tides, intense shady deals, and complicity networking.

With nationalization of the banking system Mexican capitalists, who felt betrayed, broke their alliance with the political bureaucracy and designed a strategy for their own re-constitution. The reinvention of the new Mexican State was initiated under the impulse of an intervening state with a strong neoliberal technocrat orientation, to the benefit the owners of capital. The process was based on neocorporatist negotiation between entrepreneurs and government, and built on mutual interests and compromise.

Economic and Political Impact of Globalization on the Mexican State

Under the influence of the PRI, the Mexican State initiated economic modernization and participation in the globalization processes, as a response to the trends of the economic globalization of markets, and the technological revolution that began during the last two decades of the past century. Under the pretext of cleaning up the economy, the Mexican State privatized strategic enterprises of the public sector, most of which were acquired by foreign investors, who had already penetrated all economic sectors. The high concentration of capital in a few corporations through the privatization process of public enterprises unleashed the phenomena of political privatization.

In 1987 inflation reached 159 per cent and a drop in the stock exchange devoured savings. Inside the PRI, a dissident group formed called the Democratic Current (Corriente Democrática) that later split to form a new party, the Frente Democrático Nacional (National Democratic Front) (NDF). President Miguel de la Madrid Hurtado (1982-88) was the first to stand questioning in his sixth and last term in government. On the sixth of July 1988 Salinas achieved power by controlling the election, i.e., where electoral irregularities and fraud were reported, resulting in a general crisis and the collapse of the political system.

Salinas deepened neoliberal reform and public enterprises were liquidated, economic openness was accelerated, and free commerce agreements were signed with Chile, the United Sates and Canada (NAFTA), Venezuela and Colombia (Group of Three), Costa Rica, Nicaragua and Bolivia. Amendments to Constitutional Article 27 allowed investments in the Mexican countryside. The activism of the Mexican State during Salinas’ mandate allowed the transfer of public enterprise to financial groups which were determined to maintain links of political complicity.

Vast programs for the privatization of public enterprise in Mexico had been successful, to a certain point, in ameliorating the economic intervention of the State. Mexico ranked second in privatization in Latin America during the decade of the nineties when the government transferred to private corporations assets that amounted to 31,458 million dollars, which represented 20.4 percent of the total sales of state owned enterprises in Latin America. Privatization reached 3,160 million dollars in 1990, increased to 11,289 million in 1991, and totaled 6,924 million dollars in 1992.

By June of 1992, the Mexican government had privatized 361 out of approximately 1,200 enterprises owned by the state. Privatization during 1993 represented 2,131 million dollars. In 1996 it increased to 1,526 million dollars, in 1997 to 4, 496 million, and in 1998 decreased to 999 million dollars. A report from the World Bank states that between 1990 and 1998 privatization of public enterprises reached a total amount of 154,225 million dollars, an amount only less than the balance of the total external debt of Mexico which in 1998 was of 159,959 million dollars.

The year in which the state recorded most privatization was 1991 with a total of 11,289 million dollars, while in 1998 Mexico the lowest was 999 million dollars. The new government of Mexico plans to privatize airports, railways, and the energy sector, oil and electrical industries.

The benefits of privatization have not yet been evident to the Mexican people even though defenders try to demonstrate the opposite. According to data provided by Salinas de Gortari (1988-94), privatization reduced budget expenditures to finance social programs thus preventing a fiscal deficit. However, the effects have not been satisfactory over all. Programs of privatization in Mexico have reduced employment by half, while production has increased 54.3 percent with a significant reduction in investment. A study by Galal et al (1992) analyzed the after-privatization performance of twelve companies in different countries, including Mexico, and documented an increase of 26 percent in profits in eleven cases but an increase of benefits to workers in only three of the cases.

On the 17^th of December of 1993, the United States Congress approved the North America Free Trade Agreement (NAFTA). Reactions were not long in coming. On January 1^st, 1994, the date on which the Agreement came into force, the indigenous people of the State of Chiapaz created the National Liberation Zapatista Army (Ejército Zapatista de Liberación Nacional). Quarrels, resentment and bitterness between political groups inside the PRI resulted in the assassination of the official candidate to the Presidency of the Republic and the assassination of the General Secretary of the PRI. Even with these conflicts and serious problems the economy remained stable and Salinas was elected to his sixth and last term in 1994 with victorious animosity. Zedillo became President with 17 million votes, the greatest democratic legitimacy given in the history of Mexico. But, after twenty-one days in power, Zedillo faced the worst economic crises in the history of Mexico, the so-called December’s Mistake.

Two years after the privatization of its banking system, in December 1994, Mexico was forced to devalue its peso which set off a macroeconomic crisis characterized by increased exchange rate volatility, further devaluation of the peso and was followed by a financial sector crisis and bailout. The meltdown of the Mexican stock exchanges resulted in the loss of half of the stocks value and share prices, for major Mexican companies quoted on Wall Street, dropped 75 percent within a few months. However, after this situation was resolved a deeper crisis in financial markets came in the form of the devaluation of the peso and the sovereign-default crises. The majority of the governmental crises, without a degree of investment (as is the case of Mexico), were caused by characteristic weakness in governance. If local people and foreign investors fear the Mexican peso will be devalued, they may convert pesos into dollars.

The new structure of State debt, during the Mexican crisis of 1994-95, has been studied widely in order to understand the way in which financial markets, governments, and multilateral institutions respond to the new questions of governance. The Mexican crisis raised the problem of sustaining fixed exchange rates in an environment of high mobility of international capital. Mexico did not recover because its weak financial system was strengthened through the intervention of the International Monetary Fund (IMF). It recovered because it had benefited from increased exports to the United States as a result of NAFTA and the accelerated growth of the neighboring U.S. economy.

The economic crises through which the Mexican economy has passed, aside from the inability of its institutions to limit the range in social problems, have caused repercussions on the application of neoliberal economic policy and are the key factors in the deterioration of social governance. One of the most pervasive and disturbing aspects of economic crisis is its effect on the most vulnerable population groups. In general terms the economic policies implemented by the majority of Latin American countries present similar features, although there are some differences in the design of the packs.

Although the causes and consequences of the different economic crises, through which Mexico passed from 1976 to 1994-95, have differed the crises were preceded by periods of high economic growth that could not be sustained because of the imbalance the crises caused. The crisis of 1976 showed the limitations of the economic model that was based on the principle that economic growth depends on major state intervention. The crisis of 1982 began with the idea that oil could be used as a lever for economic development and resulted from an active policy that the State should administer abundance. This resulted in high degrees of external indebtedness and an irrational expansion of the state.

Both the international debt crisis of the eighties and the Mexican crisis of 1994-95, also called the „Tequila effect“, are considered to have their roots in the financial imbalance in the public sector. But in comparison, the later crisis (Asia, Russia, South Africa, Brazil, etc.) had its roots in the financial imbalance in the private sector and is considered the first global financial crisis to impact the economies of emerging countries. The Asian crisis exploded just after the crisis that lowered the Mexican peso. It therefore seems that financial crises occur more frequently in the later years of emerging economies, such as was the case in Mexico.

If the democratic social development and the economic growth of emerging countries is controlled, they are not significantly more corrupt than more developed countries. The pack of credits given to Mexico in 1995 by the IMF was a reward for banking with more risk. While more governments of other countries lend to Mexico, their banks have more security to cover their loans. In reality, the privatization of the banking system into financial groups emerged from the „steam“ and complicity among investors and politicians who took advantage of international organizational finances channeled to rescue Mexico from the debt crisis. However, their differences in crisis management took them into highly indebted economies, which had the opportunity of transferring charges to society.

In 1995, as a result of these events, a program to modernize public management and eliminate corruption, decentralize public functions, and reorganize intergovernmental relationships within the federal system, was initiated in Mexico. The monopoly of power and its discretionary use, retained by some members in the structures of government, were still the main source of corruption with impunity, therefore deep institutional reform was required.

The program pretended to develop mechanisms of major responsibility and accountability for governmental agencies, in the matter of management of public services, and also to ensure the major disposition of established associations with non-governmental organizations. It is necessary to consider that these non-governmental organizations were the base of credibility and impartiality before the citizens whom they represented in human, political, labor, and citizen rights to governments that sustain poor relations, emanated from the PRI which always tried to incorporate them when they were more independent.

In 1996, public and private investments in Mexico were kept under the levels of the seventies and eighties. The results of the globalization processes confirmed that it had gone in only one direction: the entrance of transnational and multinational enterprises, now called global enterprises or contemporary business, which in essence are foreign, have taken legal ownership of the natural resources, land, etc., and returned few benefits. For example, the market value of General Electric calculated at 520,250 million dollars, is equivalent to the GNP of Mexico. In fact, 23 of the greatest transnational and multinational corporations have sales that are higher than the GNP of Mexico. Neoliberal governments have shown their inability to reduce the pain of the integration processes through more favorable negotiations that would allow comparative and competitive advantages for Mexico.

DAMNED INHERITANCE

At the end of the period between the years 1982 and 2000, which marked the development and implementation of the Neoliberal State model in Mexico, the results were disastrous. Although there were achievements in economic growth during the last four years, 1994-2000, the Mexican economy showed several structural imbalances as expressed in a corresponding fiscal deficit. As Lomas (2000a) affirmed, President Zedillo’s inheritance also included the great pressure of debt service from the financial rescue that will exercise influence over public finances in the medium term. Lamentable as it is foreseeable the present administration will leave an inheritance to the next government of a greatly compromised public finance and an even greater inability to respond to the reasonable demands of the people. Zedillo´s inheritance amounts to more that two billion dollars (million, million dollars) in public debt, including the wasted debt of the Institute for the Protection of Bank Savings or Instituto para la Protección del Ahorro Bancario (IPAB).

Interface Government - Companies

In Mexico, the main obstacles for managers are continued crime and robbery, because of an inadequate infrastructure, inflation, corruption and lack of financing. Many companies still do not pay taxes.

Unjust Distribution of Income

According to Cepal’s estimates President Zedillo left a country with an increase in the difference in income distribution, i.e. high wealth concentrated in a minority and poverty in the majority, from 40.5 to 45.5 million Mexicans. Of these, 26 million are mostly indigenous, rural, and live in misery. The contradictions were caused by polarized growth, according to Boltvinik an expert on poverty and income distribution in Mexico. He stated that, „When the economic pattern that has been followed up to this point in Mexico is able to generate growth it will be accompanied by a growing concentration of income and an increase in poverty among the poorest strata. …the crisis of 1994 produced a brutal impoverishment of the population…until 1996, when the economy began to recover, and income again began to concentrate….“. In a period like the current one, in which the Mexican economy reached a peak over 18 consecutive trimesters of growth, the benefits went to a very reduced group of people: „only the crumbs fall down“ states (González Amador and Castellanos, 2000).

Poverty increased from the 36 to 38 percent of the total of Mexican homes in 1994 from 45 to 47 percent in 1998. Data from the National Survey of Income-Expense in the Homes (ENIGH) of the National Institute of Statistics, Geography and Informatics (INEGI) indicates that between 1994 and 1998 the number of Mexican homes subsisting under the poverty line with a monthly income no larger than 560 pesos at a constant value of April 1994 increased from 69 to 76 percent of the total population. In general terms, the investigators agreed that poverty increased by more than 5 percent during Zedillo’s term in office. This resulted in a society with big contrasts in income distribution, where 20 million Mexicans (20 percent of the total population) live under conditions of extreme poverty, and more than 40 millions (40 percent of the total population) live below the line of poverty.

In the last three six-year terms the rate of inflation has risen above the increases to the contractual minimum wages and, therefore, above the level of the workers' income. World Bank figures show that 42 million Mexicans have salary levels below twenty pesos daily, the equivalent of less than 2 dollars a day. Between 1974 and 2000, the real wage of the workers had an accumulated deterioration of 72 percent. During Zedillo’s government an accumulated loss of 50 percent in real wages was recorded, registering the lowest purchasing power in the last 18 years. With data from the United Nations organization, 64.5 percent of the population received insufficient wages to sustain minimum nutritional requirements; 40 percent of Mexican women live in homes with low income compared to 20 percent of Mexican men (Jiménez, 2000). More than half of Mexicans old enough to work were employed in the informal sector of the economy.

During the period 1964-1981, the gross internal product per inhabitant rose to 7,776 dollars a year, with an average annual growth of 3.4 percent. However, after l982 with the implementation of the Neoliberal State model in Mexico, the growth of the gross internal product fell. For the period of the Neoliberal State, which lasted from 1982 to 2000, the gross internal product per inhabitant only grew on the average of 0.3 percent yearly. The National Survey of Income-Expense in the Homes, carried out by the National Institute of Statistic, Geography and Informatics (INEGI) in the year 2000, reports that the generation of wealth increased in the last six years, but the distribution of the wealth became more inequitable, with alarming levels of deterioration.

In Mexico 38.11 percent of national income is concentrated in 10 percent of the homes. At the other end, 10 percent of the poorest hardly receive 1.50 percent of the total, when in 1996 it was 1.79 percent. The income available monthly to 10 percent of the poorest homes was 26 percent less than in 1994, while for ten percent of the homes the reduction was 20 percent (González Amador and Castellanos, 2000). The coefficient of GINI for the monetary income in 1992 was 0.5086, in 1994 it was 0.5137, and in 2000 it was 0.4889, which indicates a tendency in the concentration of the national wealth to decrease, though those with more however continues being high.

Quick economic growth has not resulted in an improvement in the levels of the population's standard of living, due to the inequitable distribution of income that impedes the transfer of macroeconomic benefits. The higher rates of growth that reached four percent, on the average, of the gross internal product between 1996 and 2000 has not contributed to improvements in the well-being and standard of living of the family, because they contribute 2.4 real percent of the product per layer. According to an analysis of The Financier (2000), for each peso (Mexican currency) that was generated in the economy in the first trimester of the year, 0.07 cents corresponded the population with scarce resources (38.11 percent), while the population with high levels of revenue (10 percent) obtained 50 cents.

Since 1994 when NAFTA was signed regional development has also been inequitable and unbalanced, subject to processes of economic separation that were the result of integration with markets of the North. Mexicans with lower revenues per layer are concentrated in seven States in the Southeast of the country. They represent less than 10 percent of the national gross internal product, while with a similar population, six States in the North generate 23 percent of the national wealth. The pattern of export growth based on cheap manpower allows only that small group of companies to benefit from the commercial treaties between Mexico and other countries.

Weakness of Governance

Weak governance in Mexico, for example, had its beginning in the weaknesses in the spheres of economics, society, culture, education policies, etc. and in the weaknesses of government institutions, although in the past the Mexican State was strong in creating institutions and public policy. The characteristic weaknesses of governance, were official and private corruption, influence peddling, corruption and inefficiency in the judicial institutions, and the influence of drug cartels. Moreover, deficiencies existed in internal security in the form of guerilla groups operating in rural areas and violence in the big cities.

The governance deficiencies were related to the uniqueness of the political system, which had its origin in erroneous economic policies implemented by the wealthy, who then created the organizational design for the transition of the Mexican State. Mexico has lived with the people focused more on the ideas of its rulers than on concrete proposals for national development through institutional development. The Mexican State has been able to maintain its uniqueness by making political promises that offer social protection on the one hand and more benefits that would favor the diverse social groups on the other.

At the present time, in the form seen in Mexico, the implementation of governance decreased the ability to achieve political normality. There was an attempt to subordinate electoral democracy to the governance system that was not necessarily democratic, as is expressed in the Political Constitution of United Mexican States. The Constitution defines democracy „not only as a judicial structure and a political régime, but as a system of life founded in the constant economic, social and cultural improvement of the population.“ Democratic elections are not only freedom and fairness as sufficient criteria, but electoral processes that can only lead to freer and fairer governance when elections are the culmination of a democratic process and when democracy is not subordinated.

Political Uncertainty and Security of Property

In Mexico’s specific case, a consistently high factor of political risk (qualified as " BB ", non-investment degree) is the quality of governance that embraces the quality of the public sector’s institutions; the efficiency of government services and the government's capacity to establish macro-economic stability. In an analysis of the dynamic factors, the estimate of the monthly national risk index is the decisive criteria for calculating the ratios of imports to reserves and debt to exports. Socio-political uncertainty is an important component of national risk.

Another important aspect to determine is the uncertainty involved in the regular transfer of government in order to evaluate the possible uncertainties caused by elaboration of the laws. The government's constitutional position (as a result of elections) is usually accompanied by big changes in the rules and regulations that impact on business.

With regard to the uncertainty in equitable application of the law, it is important to determine if companies trust the ability of the authority of the State to protect their property rights and to guarantee a dependable judicial process. Robbery and crime are serious problems that can substantially increase the costs of doing business and there is no trust in the authority of the State to protect people and their property from criminal acts. The unpredictability of the judiciary presents an even bigger problem for business operations. Public insecurity in Mexico has put the country into a situation of near chaos, surpassing other institutions that are pillars of an already decomposing system, as in the case of the PRI.

The governments’ years in power leave behind „open wounds in the national conscience“ from the indigenous conflicts of Chiapaz. The result being: increasing levels of poverty, the growth of the informal economy, increase in violence and public insecurity, corruption with impunity, the precarious conditions of micro, small and large enterprises and the deterioration of the countryside and farming sector.

In sum, the current problem in Mexico is good macroeconomics but bad microeconomics.

THE TRANSITION OF THE RÉGIME OF THE MEXICAN STATE: FROM STATE MANAGER TO A STATE OF MANAGERS

The pattern of the State party, and more concretely of the Mexican PRI-State, has ended. The failure of the PRI to form the federal government and their loss of an absolute majority in the Union Congress in the last elections was an event that constituted a new stage in the life of Mexico by placing the alternative National Action Party (PAN) in political power. Unlike other changes in power that have taken place in Mexico this one has been a peaceful road taken in an atmosphere of political stability, culminating in the arrival of a party contrary to the one that had held power.

During the last four administrations the transfer of power under conditions of economic and political stability was not evident. First it was necessary for the PRI State to disappear. During the last sixty years change occurred more within the party than in the political régime centered in a State party, characterized as a hegemonic political party. The PRI was a hegemonic party that held power for a period of seventy-one years, from 1929 to 2000. It served to sustain a presidential system with meta-constitutional powers, omnipotent above other powers (legislative and judicial) and over the spheres of economic life, politics, society and culture.

For the government to change required agreed upon and sometimes not agreed upon accommodations between the political and economic interests. First, the President relinquished constitutional powers and the system of patronage, established by the PRI and given to all the presidents who had emerged from within its ranks. However, the changed governing party retained the same presidential structures derived from the political culture of the Huei Tlatoani, or supreme lord, who ruled over the military, civil and religious life of our Aztec ancestors. For the political culture and government régime to truly change, structural transformation of the laws of public administration would be necessary, as well as strengthening legislative power, freeing judicial power and delimiting executive power, especially presidential control over the government and the State.

In the last two decades, since the eighties, amid major financial crises and a neoliberal agenda to change economic policy, growth stopped and its decline accelerated during the last four years of the nineties. This resulted in big imbalances in the economic processes and the dismantling of the defense mechanisms of the Mexican State. During the decadent stage of the PRI-presidential system, corruption increased, social cohesion was destroyed and the levels of poverty increased alarmingly. Income became increasingly concentrated „in favor of a minority coinciding in its composition and voracity with the elite of Creole inheritors and beneficiaries of the colonial caste system and of the porfirista system.“ So, in part, the defeat of the hegemonic PRI party was due to the collective rejection of economic policies that increased the levels of poverty, corruption and social violence. The PRI lost its capacity to respond when faced with a more active civil society.

Zedillo, the last PRI president, „cut his finger“ to indicate that his successor inherited the power to allow the tri-colored candidate's election. He was not able to stop the buying of votes or coercion of the voters. But he did discipline the most reactionary to impede their stealing the election again and then, when losing in the war with the other parties, to open the way to a democratic transition that would reinvent the system. In a few hours it was transformed from a hegemonic party and authoritarian government régime, to a more democratic system, concluding the process of democratic transition, and handed over power in conditions of political normality, without any uncertainty about the change of the government or regime.

The transition occurred from a single party system to a democracy. However, this democratic transition was questioned to a certain extent, because what really happened was a change of the party in power. In any transition, it is evident that the total abdication of those powers that have to do with the control of the political process would leave a power vacuum resulting in adverse consequences. Still more, it remains to be seen if the democratic system improved the living conditions of Mexicans. Certainly, there was not a change of political régime, but a deepening of the neoliberal economic policy that had already been applied in Mexico since the middle of the eighties. The 71-year era of the hegemonic PRI party ended and it is expected that it also ended the Mexican presidential era.

The change to democracy after sixty years under the same political régime and the same access to political-power, has modified expectations and the operation of national public life. These changes have partly been the result of filling the vacuum created by the political party that had been in power. However, the form of the election was highly questionable in that it appealed to the „useful vote“, and not to the „ethical vote based on principles and projects.“ PAN built its own place in the electoral market by conditioning voters to accept the falsehood that it was time for a change. They explained that „it didn't mean that they were in contention with neoliberalism but their only goal was to shoot the PRI out of The Pines“ (Rodríguez Araujo, 2000).

For some skeptics what happened was simply a change in the way of doing things, rather than in the content of what is being done. By all means possible during its last three years it was the satanic PRI that sold the depoliticized youth on the idea of the necessity and possibility of altering political power to create scenarios which would multiply opportunities for social mobility, education and employment for them.

The change of political party within the same régime represented a rupture in the old Mexican political system and continuity of the processes of development according to the neoliberal pattern imposed by the interests of transnational capital. This way, the change became significant because it represented a final balance between a presidential régime and its neoliberal economic model.

With the change of party in power came the end of the PRI era that covered a period of seventy-one years, already well known as the era of the dinosaurs with 22 presidents from the same party. Members of the „revolutionary family“, had a patrimonial governing style with investiture and where public goods attributed to the public position were considered personal property. As well as paternalism the chains of corruption and complicity facilitated political control through corporate practices, clientelism, and the corruption of those who had less resources. The corporate interests that conditioned the votes of citizens also oppressed their political and human rights. It is interesting to analyze the different presidents’ careers, the first from the military, who gave way to lawyers, then to economists and finally a manager.

When considering the change of the Presidency of the Republic, the end of the first sixty years was different from the last four years that left an inheritance of economic crisis and political deterioration, although political decomposition, violence and corruption still persist. In the last two six-year terms, that of the technocratic presidents who privatized politics, Salinas (1988-94) and Zedillo (1994-2000) truly represented the two big local groups of officials and managers politically. The two technocratic presidents had as a common governing characteristics a personal focus on social and power relationships. Both fostered the emergence of complicity between the technocrats and managers enlarging the capital-politics relationship to the men that held economic power, without respecting the rules of the system or the correlation between social forces and politics.

The Mexican technocracy has been insensitive and indifferent to social problems. Both, Salinas and Zedillo can be identified more as administrators or managers of economic politics than as rulers. The strategy they used to implement the neoliberal model consisted of maintaining a reduced group of technocrat economists in a network of alliances in collusion with capitalist groups. These capitalist groups, those whom Ortíz Pinchetti (2000a) named the nomenklatura, had insatiable financial interests and were the main beneficiaries of the model. In Salinas’ strategy, through the support of PAN, political leverage was given to the group of managers and financiers. It was their mega-negotiations with Zedillo’s group (Grove, 2000) which killed the PRI. The decentralization of power began with Salinas and was deepened by Zedillo. Together they consolidated the neoliberal economic model.

Salinas first and later Zedillo, governed with authoritarianism to implant the economic policy imposed by supra national institutions. They were flexible in politics where they enlarged political freedoms for pragmatic purposes, provided they didn't contravene economic policies. The principle was stated this way; all economic reforms without political reforms are insufficient and result in dangerous contradictions. The modernization project of the technocratic presidents, neoliberalization and globalization, were promoted by the PRI governments. The government paid dearly because it gave up power and was not able to give benefits to most of the population because the modernization project was sustained by a substantially different economic order and guided by the governments that emanated from the Mexican Revolution.

In Zedillo’s the sixth term in office the Deputy of the opposition, Batres, accused him of seeking to be a „Robin Hood the other way around, robbing from the poor to give to the rich….“ The neoliberal governments confirmed that they acted in way which was „wicked, nothing moved them and their biggest works were the businesses that in some years allowed some to be enriched“ (Rodríguez López, 2000). But the unusual thing was that the same PRI parliamentarian factions abandoned the old habit of defending their president to criticize the mistakes and inefficiencies of their administration. Social dissent could only cause loss of the neoliberal modernization project, which supposed a 25 year period of adjustment, during which time they sought conserve power, based on the control of the incomes of the working people and not of capital.

Although privileged with stability and the restoration of economic growth, with high rates of gross internal product that reached 7.8 percent in the first trimester of the 2000, Zedillo ended his term in office without having fulfilled his campaign promise, the so yearned for „well-being of the families.“ Instead he had dismantled the public institutions that promote social well being. It was troublesome that the high rates of growth of the gross internal product were transitory and high rates of inflation caused more crises than were experienced in the past.

Decentralization of power was initiated by Salinas and expanded by Zedillo. They consolidated a scenario of power shared with divided governments, formed by the electoral advances of opponents to the left of the PRI, which constitute the federal, state and municipal governments' real counterbalances. The consolidation of this new modernization project strengthened PAN’s natural belief that „it only seeks reformation in the level of political administration that should support neoliberal modernization“, (Montemayor, 2000). In this way PAN advanced the neoliberal and globalization project and opened the way to a federal and municipal administration in accordance with „modernity.“

During the last 18 years the PRI suffered an involution in the adjustment processes of the project. Among the highlights are its own ideological transformation in making neoliberal principles more acceptable, its complete opposition to revolutionary ideology, and conversion to the modern stage of the Mexican Revolution. Montemayor (2000) argues that the PRI bet, in its obedience, against itself. The project of modernization „tunneled their structure and, mainly, the understood the value of balancing forces and groups that participated in the previous Mexican political system.“ For the neoliberals, the adjustment measures taken during the last three governments in Mexico were correct and, at the same time, the conflicts of the country only came from the corruption and inefficiency of government príistas.

Another reading of the fall of the PRI-State régime is that dysfunctionality reached the bureaucracy of the administrative apparatus. With high levels of corruption and inefficiency, and with an authoritarian, vertical structure that only responded to the president’s decision, it showed its inability to give answers to the demands of the citizens. This type of organization of public administration, according to Barboza Rodríguez (2000), „generated many useless works and enormous waste. And, not a few times, one sector builds what another destroys. The Mexicans only know about those ‘white elephants’ from the dance of millions of pesos. The tangible benefits are null or poor where there are any.“

In Mexico the XXI century began with the new paradigm of the manager government. PAN’s charismatic leader, Vincente Fox, won the election for the Presidency in the year 2000. Fox was the candidate guided by a marketing campaign that emphasized the régime/anti-régime condition. He took the PRI out of the presidential residence, The Pines, ending the PRI régime and beginning a new cycle. In part the people voted more against the PRI than in favor of Fox who said that his government would bring a transition to a new democratic régime. In his speech of August 2, when he received his Certificate of Elected President, Fox stated emphatically: „I will head a transitional government that is inclusive, capable, and with a vision of a State with high standards of honesty and quality“ (Macroeconomics, 2000).

The endogamy of the Party-state in power for 71 years had generated into a perverse structure with problems that the Mexican society would no longer tolerate. Fox was the beneficiary of the decisive vote of the poor from the big urban centers, who were formerly excluded, from the votes of the rural areas, and from native stragglers who renounced the PRI. However, the supposition that the „green vote“ of the rural and excluded areas would decide the elections in favor of the PRI was correct, although this party still obtained a majority, though smaller than in the previous federal elections of 1994. This electoral behavior had not been seen before because the voters had differentiated their vote in order to prevent a single party from getting all the power.

In the 2000 elections, for the first time in 71 years, the PRI lost the presidency of the Republic. This was a transcendental event for the political life of the country because it radically changed the political perspective and national expectations. The defeat of the hegemonic PRI party, which „progressively destroyed social cohesion: normally expressed and implicit, that held us together as Mexicans was due to the government's inclination to favor the Creole oligarchy and the concentration of monopolized capital“ (Ortíz Pinchetti, 2000).

On the other hand, Touraine (2000) argues that the result of the elections put an end to the long reign of the PRI. It had reinforced the political action and intervention of the State in a country whose growth had not reduced social inequality. The economy grew but the benefits of that growth were not distributed, that is to say, it generated wealth but it also generated poverty. The opposite, the reduction of the weight of the State, was announced, although the public sector was traditionally weak in Mexico. Mexico’s entry into the global economy increased the State’s options for institutional change.

It opened up the Mexican political system for movement guided by the changes they had made, beginning with protest and public debate, more than a new political project. However, this democratic project could only be understood when viewed from the standpoint of political depolitization.

In fact, Fox’s political and economic project gave continuity to the technocrats’ project which was not more than a transition, because the only thing that happened was not a change of political régime but an alternate party in power. Given the conditions of the system the ideal thing would have been an alternate party with an alternative, a necessary alternative to government. In any event, political transition has been possible thanks to that same neoliberal model as disarticulated to civil society and citizens. What has happened in Mexico, according to several analysts, is that „a type of caudillista democracy has triumphed over a weakened left, marked by weak, unstructured political parties that reflect the decadent, centralist elite“ (Muñoz, 2000). However, it is highly questionable whether the change has lead to a democratic régime and the death of a dictatorial presidential régime.

More than continuity, the pattern of neoliberalism increased with the Fox’s rise to the presidency of Mexico. He represents a third movement of the neoliberal economy begun by Saline. Nevertheless, the technocrats were hit politically by the managers. The new political class, which mainly emerged from the local organizations of small and medium managers in the North, wanted to liberate the country from the corruption and clientelism of the State party. The Manager State was dismantled in the rise to power of the technocratic economists. Now with a manager-like President in Mexico, the Mexican State has become a State of Managers that treat democracy like good business, called the Coca-colaification of Mexico in reference to the managerial antecedents of Fox’s transnational government.

According to a Canadian managerial leader, for Fox the governing of Mexico won't be the same thing as managing Coca Cola, but his managerial experience will help him to make decisions (Inclán, 2000). The analyst Rubio (Jiménez Lazcano, 2000) describes Fox as „evidently a practical, pragmatic person who clearly adapts to circumstances. He has his priorities very clear and he has a clear sense of who to use and for what reason; he wants to use each one of the people. And in that sense what we see is a person not very ideological, not very dogmatic, but very adaptable to circumstances as they arise, moment by moment."

It is paradoxical that in a country where more than 60 percent of the population is poor, the elections were won by a party of the right that proposes to deepen the neoliberal model responsible for the increase in poverty. Fox’s rise to power, coincides with the consolidation of a concentration process, an economic oligopolitation, and political centralization of decision-making (Fazio, 2000a).

With Fox the Mexican presidency is transformed from autism to democratic caudillism. Fox’s ascendancy to the Presidency of Mexico, according to Krauze (mentioned by Fazio, 2000b) resulted in „a direct, immediate switch to managerial power. Wines of new marketing in old wineskins of caudillism…a caudillism plebiscitary with messianic edges, very dangerous in a country like ours that finds the separation between the church and the State difficult“. Nevertheless, the ghost of presidentialism has not gone away with Fox in the presidency. He has assumed an attitude of „commander of the town“ because behavior patterns still exist that encourage it, reinforced by the existing Constitution. A true change in the régime implies a deep reformation of the State with a new Constitution, and in which diverse political forces delimit presidential activity.

Fox is the first manger president to arise out of the local elite from the center of the country. He represents the „electoralist stream“ of the managerial elite in PAN and especially the stream dominated by the faction from the northern states or „Monterey Group“. It has loose connections and is supported by the ideology of the new, Mexican right, as expressed in current pragmatism or neopanism, and is opposed to traditional orthodoxy. According to the ex-leader and twice Panista candidate, Pablo Emilio Madero, nephew of the democratic anti-re-electionist Francisco I. Madero, „Vicente Fox Quezada’s eventual victory in the presidential election crowned the agreement of a group of managers. In 1982, these managers decided, in a meeting in Cd. Juárez, Chihuachua, to infiltrate and control the National Action Party (PAN) to gain particular interests. The virtual ascent of neopanism to power constitutes a serious risk for Mexico because the pragmatic principle of personal interest would take precedence over common interests. And once in power they would be overcome by the temptation of authoritarianism to eliminate opponents, which would discourage the nation“ (Ruiz Rocks, 2000).

Fox’s proposed changes are considered imprecise as they relate to the panista proposal. According to Loaeza (Rivera, 2000) „The lower and middle classes are described as not reactionary. On the contrary they want political change, would like a modern society, and are outward looking, though on the other hand, would be interested in a reduction of social inequality but not absolute equality, because that doesn't interest them. They have a vision of an anti-egalitarian society, they are not interested in equality but freedom. Freedom with order yes…social justice is not a panista topic…“

Contrary to the current doctrine, the ideology of neopanism, with certain flashes of fascism, defends the „changarro“ from the attacks of official populism. With the focus on a distant political social democracy, the view is that the „useful vote“ doesn’t recognize the difference in ideologies but operates on the simple desire to reduce the power of the State Party. And under the representation of „virtual party unity“, the political class is recomposed with the rise of the managers to formal power. The managers, mainly from managerial unions in the North of the country, rose to political power using their managerial unions as launching platforms.

Nevertheless neopanism fought official populism and the decomposition of the Mexican political system was the main reason that a new, anti-party populism arose. According to Touraine (2000), this political decomposition goes hand in hand with the advance of worldwide economic conglomerates. In the Mexican case it is also expressed as an alternative „to the Mexican“ that, though difficult can be considered „like a real road for the creation of a true democracy.“ But in the aftermath of these political remarks, it is as dangerous to give priority to the fall of the whole substance of their régime, as it is to encourage the union that is already way too strong between a vague populism and economic liberalism. The resistance to this populist tendency attacks the political system at the same time that the capacity of the State to intervene has to be organized for popular movements. These popular movements have the capacity to manifest and to express the popular demands of the less favored sectors, in such a way that they really contribute to the restoration of public life.

The transition to the new régime has not been so smooth and soft. The caciques that held political and economic power weren't resigned to their loss. The death of the wounded PRI has ended in internal disputes over the little power that remains and the political groups defend their interests to their share of the power, resulting in violent confrontations. The smoothness of the political transition leads us to suppose a pact was made with those with real power.

CHANGE OF THE PARTY IN POWER: THE MEXICAN STATE OF MANAGERS IN THE NEW PAN - PRESIDENCIALIST PERIOD

The arrival of the managers to the Mexican State meant the displacement of politicians with formal power. In other words, what changed was formal power, because the real power remains unalterable. The Mexican Council of Businessmen stopped being a pressure group in the face of the power of the State and became instead the representatives of the managers in the federal government who determine national economic and political decisions. That is to say, the political power taken by the conservative groups that held hegemonic, economic power and the national neo-oligarchy was subordinated to the interests of transnational capitalism exercising a new governance strategy. This strategy allowed them to dominate and directly control the means for achieving their maximum benefit (efficiency), without necessarily appealing to the mediation of a political class that was highly paid for the mediation of the arrangements for production factors. This is the case between capital and work, for example. However, in humanity's history, the achievement of efficiency has not brought social justice.

The new State of managers administers the existing order efficiently to guarantee transnational global capital that the best conditions for investments exist in Mexico. Already the general coordinator of economic affairs in the transition team guaranteed „zero discrimination“ for Mexican entrepreneurs. On the other hand, the leader of one of the most powerful organizations of managers warned that Fox’s government would be friendlier to the production sector. Fox has a clear vision of the needs of a company, so he can create wealth and more work sources (Becerril, 2000).

Fox represents the alteration of government and has stated that the purpose of his public administration is to increase efficiency in the government's work to a large degree and to eliminate all that has to do with error and corruption. „I will delimit the functions that reduce the effectiveness of government administration and damage of the whole society… …we have to put an end to political and administrative centralism and promote the invigoration of federalism to drive the development of the regions and the viability of municipalities, starting with their vocation and resources and the expectations of their communities.“ (Macroeconomics, 2000).

His project of reengineering the federal public administration followed the advice of the World Bank. Based more on the pragmatism of changing the administration without changes to the law, it is sustained more by horizontal and flexible structures than by approaches to efficiency, effectiveness, opportunity, pragmatism and quality (Abascal and Macías, 2000a). The horizontal and flexible structure was articulated in a strategic plan reaching as far into the future as 2025. It combines managerial approaches with experience in the public sector. It was formed by super advisers and super managers who coordinate the work with regard to human development, security and justice, equal opportunity, and restoration of the government's institutions, general coordination, Czars (anticorruption and borders). It also formed Secretaries of State in government, social development, labor, companies and industrial development, agriculture, and country property.

On the other hand, the managers have declared (Becerril, 2000) they are convinced that the new government will be „friendlier“. They request options for participation in the investment deprived energy sector (electricity and secondary petrochemical). They reject that it seeks to recapture populist politics and they trust that the relationship is close enough that they will be critical when Fox makes a mistake. It is clear that Fox will govern the Mexican State with a focus on the New Public Management, as if Mexico was a corporation: Mexico, CORP. which gives the petrochemical and electric sectors to transnational global capital.

Fox's approach is frank and pragmatic. Madero qualifies Fox as „pragmatic, a man willing to throw ropes, say big words, buy votes, anything to win the election… in the name of pragmatism, and I worry that for him the pragmatic principle is more important than the democratic principle… (we) shall have to wait and see whether a panista government under Fox ‘will respect the people of Mexico for criticizing those who are… already in the government in power or he will do the same thing, which is to eliminate those that are opposed…“ (Ruiz Rocks, 2000). Fox´s discourse was characterized by its open style and it broke with rigid protocol. His frankness, businesslike style and democratic genuineness are points in his favor. Fox has the intention of making his government a dynamic promoter of development, vigilant of human rights and pragmatic in administering domestic policy (Churches, 2000).

As a good manager, his pragmatism in solving problems is his main asset in achieving an „agreement“ of the aspirations among the various sectors of society. But also his weak point is in negotiation. He tries to create „minimum points of outburst“ where all the political actors simultaneously put on an air of agreement in economic and political matters. The proposals will be open to questioning by civil society and legislative power, where a majority doesn't exist for some of the political parties. It will be easier then to achieve cohabitation that won’t be unconditional to build the consent necessitated by lack of absolute control of the Congress. Fox has said in this respect, „my government won't make overall decisions in economic matters that will be against the interests of the majority. Nothing will be done without consent or behind backs or against the will of Mexicans“ (Macroeconomics, 2000). In this sense, there is consent among the diverse political forces to delimit presidential power by suppressing his meta-constitutional power and creating an independent civil service free of the executive’s will.

But Fox’s pragmatism doesn't have an ideological base. It is be postulated on liberal values but the necessity of escaping the priísta cage, as stated in Reyes Heroles (2000). Fox declared that his government won't be bitter and it has demonstrated that it is moving away from the demands interposed against him by those who accused him of receiving the foreigner’s money. Thus he confirmed certain rumors that came, in part, from former president, Salinas de Gortari (Hills M., 2000b).

The State’s managerial focus considers citizens as clients whom it must satisfy with services of absolute quality. The president exchanged the word client for that of citizen, with a vision on the one hand, for example, that it is inappropriate to promote the policy of indigenous community development. Disrespectfully, Fox has called the indigenous people „vocho, changarro and tele“ in response to their centuries of rebellions against the capitalist system for the injustices perpetrated against them. To neoliberalism centered in the forces of the market, the indigenous peoples are not consumers. Therefore, they are disposable and, in the best case scenario, a population to be integrated or assimilated into the lowest ranks of the work force without rights and subordinate to capital, as exemplified by the proposal made during Fox’s campaign to train them to be „the foreigners' gardeners“. Political analysts agree that „his proposals have been contradictory, sometimes retrograde, sometimes hopeful, but always lacking a coherence that would make the program complete. We have to be critical of a possible, new liberal version with some attenuation“ (Ortíz Pinchetti, (2000b).

In this way, the factions integrated into the directing elite were recomposed of managers to guarantee the continuity of the economic model, the dimensioning of a functional democracy that matches the discipline of the market, and the structural reinvention of the system. This allows a bigger reproduction of capital and deepening of the dominant instruments to markedly increase differences and social injustices. But this democracy favored by a authoritarian free market system is a hegemonic ideology of the elite of transnational globalized capitalism that imposes decisions to its own benefit. However the real power remains under the control of transnational capitalists.

On the other hand, the PAN in government will have to confront the issue of waste during the President's rule. There is evidence that Fox’s governing style will be less flexible in politics and more authoritarian in economic politics than previous presidents, although he affirms that his priorities are to attend to the poor. Under this new correlation of forces, and with the same rules of separation of powers that established their autonomy, public matters are managed with more transparency. The frauds of the public sector and violence of the conflicts are now treated by the rule of the State and citizens can demand the right to the rendition of bills and transparency. Establishing the material conditions for law and order will be one of the government's challenges.

The organization of the new political system will be conditioned by economic politics. According to Bendesky’s analysis (in Castellanos, González and Hills, 2000) the country reached a macroeconomic peak that lasted for more than four years because it „was sustained by factors hidden in the macroeconomic bills such as the high price of petroleum, the entrance of foreign currencies that reduced the dollar, and the dynamics of the economy of United States (which)… can change its tendency and pay the costs of the whole Mexican society when it is, of course, Fox’s government. Among the changes necessary would be an adjustment of the exchange rate, increase in inflation, a bigger external imbalance and an inability to solve the problem of poverty.“ So the challenge is to maintain economic stability, to increase economic growth, support competitiveness and increase the productivity of the economic agents.

The political transition will come harnessed to economic reform but there won't be social advance. Structural economic reforms are needed to modernize the regulatory framework of general economic activity and strengthen the functional structure of the financial system. Cutting social expenditure in education and public health would reduce the weight of bureaucracy gradually by transferring these functions from the State to the private sector. Fox has said that they will reduce the cost of government in the next six years by subjecting it to a rigorous but gradual diet of federal public administration. Changes are needed to eliminate the lock on 51 percent of national investment to give a bigger opening to private and foreign investment and to invigorate the financial system.

Fox´s government committed to an integral fiscal reform and to tightening fiscal discipline. However, the IMF recommended maintaining „wise fiscal policies to assure the continuity of favorable growth and to avoid the risk of overheating their economy“, (Reuters, Notimex and Afp, 2000). National development was sustained by fiscal reformation, based on the federal pact to assist in removing the inequalities of regional development, but this eroded the principle of solidarity.

Privatization and opening the energy sector to competition, especially the electric and petrochemical industries, won’t work according to the same managers. „The country functions well… entrepreneurs don't want to buy Pemex or CFE. As a private sector what we want is to be allowed to compete, to participate in certain areas of production, to make them competitive at the international level… it is not necessary to put padlocks on foreign investment so that it intrudes in the electricity and hydrocarbon industries. The only rules for national capital and foreigners should be a free market economy, open commercial prices set by international competition“ (Becerril, 2000).

Amendments to the Third Article of the Constitution introduced freedom of teaching and with it the possibility of offering religious education in the schools. Labor legislation also needs to be streamlined, to reform article 123 to introduce a New Federal Law of Work less protective of the rights of workers to generate more employment and better wages. These are some of the new government's proposals. In sum the deepening of the free market model.

Under the focus of the New Public Management, Fox’s government intends to deepen decentralization of decision-making by means of invigorating federalism, a post-PRI federalism to transfer to State government resources, abilities and responsibilities. In economic matters, this accumulation of resources, abilities and decisions gives place to what Zaid called „the Presidential Economy.“ The restructuring project and the federal government's reengineering are guided by an efficiency approach to the gradual reduction of the bureaucracy in order to optimize resources and to reduce the costs of operation.

The agenda of Fox’s government is focused on eight strategic areas. These are restructuring of the Secretary of Government, modifications in the procurement of justice and public security, redefinition of functions in controlling public expense. Also, modernization and reformation of the energy industry (petroleum and electricity), redefinition of social development objectives, continuity of the economic project and reactivation of foreign policy (Chávez, 2000a). In general terms, the prevailing neoliberal economic policy has not been changed in the last 18 years, but rather it has been deepened. However, the project of restructuring the federal public administration assures that „none of the current public servants will be left in the street without employment opportunities“ (Chávez, 2000b).

The Reformation of the State, the decentralization of functions and reorganization of government bureaucracy, are required to improve democratization, governance, public administration, and to impose the rule of law for legality and justice. The challenge to organize the government lies in building a system of multi-sector, matrix management of public administration (Barboza, 2000). This can be done with a dual purpose: to coordinate the sector’s actions and to redistribute the structures of local governments, attributes and abilities. Both have as their purpose the reestablishment of solidarity and social cohesion and the inclusion of the excluded social sectors in the benefits of development.

The new government's main challenge will be to build new institutional structures to solve the problems of the new reality that faces the managerial group in power. For example, those institutions that impede the practice of monopoly and that sustain governance of the Mexican society. This governance should be considered a democratic mechanism that facilitates relationships in the decision-making processes formulating and implementing public relationships, and establishing a harmonious relationship among the three powers. In political matters, it highlights the maturity of the electoral democratic processes, to achieve political reconciliation among the diverse political forces, to foment political and ideological plurality in the organs of the State, to drive the processes of decentralization, federalism, and regional and municipal development.

The new institutions that emerge from the government's decentralized reorganization should be guided to satisfy the demands of the citizens thereby opening channels for social participation. Also, to enlarge democracy by means of the recognition of its territorial environment and structures characteristic of public organization, the direct election of representatives, the assignment of abilities to the municipal government, the coercion capacity, the existence of untapped resources, and the direct administration of local services.

With a weak fiscal structure, financing of the basic functions of the State won't be possible. Other functions of the State will be transferred to civil society and to the market. Social expense will have a limited margin to maneuver to support such social policies as education, health, public security, and infrastructure. A public, lay, gratuitous education, based on values and quality, will be the axis of social politics. Fox will have programs and mechanisms that reduce poverty, achieve a fair distribution of income, recover real income, and translate into benefits for families by means of the generation of employment opportunities, financial resources, training, etc., for all. Philanthropic societies and the Catholic church will take charge of developing some of the functions given to the welfare State, when there existed a separation between the Church and the State, such as social attention to excluded groups.

The proposed democratic capitalist model for market economies in Latin American countries needs to be revised so that the function of the results is expressed in increments of poverty. Some of the main challenges for the rest of Fox’s administration are to recover the government’s credibility and genuineness in such a way as to reduce the high index of poverty by creating one million two hundred thousand new jobs per year, and to maintain economic growth and development. Correction of social inequalities is required starting with the reorientation of economic policies. One inevitable topic is how to draft public policies that will combat inequality in education, health, infrastructure, and housing.

It was necessary that the State should govern and act to rectify inequality, create a social economy that is a humane economy, and humanistic policies in the economic sense with a high emphasis on combating inequality. Economic policies should be drafted to generate good conditions of human life and not only change the bias that gives the market an indisputable hegemony and to guide certain production bases, but to make the State responsible for combating inequality. Economic policies have to become unified to reduce poverty through such measures as the establishment of Social Banking to support families and associated companies, as well as to create a government salary pact between employer and worker, that allows workers to recover their purchasing power.

A political system is required that will produce a public administration that is accountable to the people in such a way that rulers are brought closer to those they govern and which will permit social participation in the design and implementation of public policy. However, the conservative panista speech manages only to recognize the social participation of private philanthropic non-governmental organizations. Nevertheless this joint alteration of party power, the civil society that had always maintained a relationship in conflict with a government that sought corporate control, now has the opportunity to participate in the design of the country in a new relationship with government.

A strong concern still exists, however, because of the presence of certain signs threatening danger in state governments of panista extraction, such as in the cases of Jalisco, Chihuahua and New León. The panista governments in these States left a history of repression of those civil organizations that sought commitments and that criticized the government in the defense of human rights, labor: political and civic, and sought institutional answers to situations of violence. This paper supports the lowering of the profile of the Fox government.

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