Foreign Correspondent: Keynesianism and Socialism in Mexico


Mexico City. The very first problem that a good observer of Mexican economic and social development faces is to classify Mexican political systems. The government vacillates from "left" to "right."


One of the biggest mistakes of the Mexican government is inconsistency; this affects the economic development of the country. One day a Secretary will declare that the government will sell all government business and companies, next day another Secretary says the contrary. On the one hand, because it is necessary to encourage foreign investments, Ministers and even the President will visit other countries to interest foreign companies in opening branches in Mexico; on the other hand, important government representatives declare that foreign investments are terrible for the economic development of Mexico and must be stopped. These contradictory opinions frighten away new investments from national and foreign business.


Mexico is a very good illustration of the failure of Keynesian doctrines, Government intervention, and increase of public expenditures. From 1971 to 1973 the public expenditures increased 220 percent. To cover these expenses the government increased the amount of money in circulation 48 percent. In accordance with Keynesian ideas the increase of public expenditures will increase goods, public services, investments, employment and economic activity. But reality shows that the result is a deficit in the public budget, inflation, higher prices, lower production and unemployment. In 1973 prices in general went up 30 percent and the percentage of working people went down 30 percent.

Mexican Government representatives find different causes to explain the bad situation, often blaming "world inflation," but excessive production of currency here in Mexico is the real reason.


Despite these factors, the industrial and commercial sectors have grown. The industrial sector grew 14 percent in 1973. But the agricultural problems offset the advances in industry. The agricultural system, very similar to that in Russia, the so-called "ejido" system, permits the farmers to work land that doesn't belong to them and in which they do not have an interest. As a result, 75 percent of the land in Mexico produces 25 percent of the national agricultural products. Only 25 percent of the farmers, those who own their lands, produce 75 percent. This confirms that the agricultural failures of the U.S.S.R., Chile, Cuba, and Mexico are not the result of the weather but rather of the bad political-economic systems that prevent the full development of agricultural property. The agricultural failure is clear but nobody accepts it and nobody has an interest in finding solutions to this problem (which causes the loss of millions of dollars and keeps 50 percent of the inhabitants poor and unproductive).


In Mexico 99 percent of the books about social, political, and economic matters have a socialist tendency. The market system is used but intellectually unknown. There are many businessmen who look at the government as the solution to most problems. With very rare exceptions one could say there is nobody to talk in favor of the free market system. Research among students in the National University of Mexico shows that 80 percent of the students are against private companies. It is the result of the atmosphere created by books, magazines, teachers and public men which attacks the market system and capitalism.

At the present time there is an ideological fight in Mexico, a very important one that will establish the future of the country; those in favor of economic freedom must find a way to demonstrate that the free market is the best way to develop Mexico. Unfortunately they are very few and at the same time there are, day by day, more and more people teaching the socialist theories.