Mexican Capitalism Today

Dan La Botz, Guest Blogger

Dan La Botz was a founding member of Teamsters for a Democratic Union (TDU). He is the author of Rank-and-File Rebellion: Teamsters for a Democratic Union (1991). He is also a co-editor of New Politics and editor of Mexican Labor News and Analysis.

Part 1

Mexico: A Major Capitalist Economy

One factor that accounts for labor’s defeats in Mexico in recent years is the strength, success, and power of Mexican capitalism. Mexico has a large industrial and service economy, which has since the 1970s become highly integrated into both the North American and world economy. In 2014, Mexico shipped US$397.7 billion worth of products to countries around the world in 2014, about 2.2% of global exports which are estimated at $18.2 trillion.1

Mexico is not only a capitalist country; it is the world’s thirteenth largest economy with a GDP of US$1.32 trillion.2 Forbes provides an overview: “In total, there were 19 Mexican companies on the 2013 Forbes Global 2000 list. Collectively, the companies had a combined market value of $369.9 billion, with $347.8 billion in assets; generating $203.3 billion in revenues and $16.8 billion in profits.”3 Several Mexican corporations are among the world’s largest in their fields. América Móvil is the fifth largest telecommunications company.4 Cemex is the seventh largest cement company.5 Pemex is the eighth largest petroleum company in the world.6 Several other companies could be added to the list.7

Of course, it is true that foreign corporations dominate some sectors of the Mexican economy, such as mining. Canadian corporations own 73 percent of all Mexican mines, followed by the United States and the United Kingdom, companies which are attracted by what has been called “the fiscal paradise for mining companies.”8 However, there are also large and profitable Mexican mining companies such as Group Mexico, Industrias Peñoles, and Fresnillo.9

American retailers have invaded Mexico in the last couple of decades. One-fifth of all Walmart Stores, some 2,050, are in Mexico where the company employs 210,000 workers, the country’s largest private sector employer. Still, even taking foreign investment into account, Mexico’s corporate elite is not a “comprador bourgeoisie,” but rather profitable partners in global capitalism’s exploitation of Mexico’s resources and labor force.

MEXICO’S LARGEST CORPORATIONS FROM FORBES 2013 LIST

OF THE WORLD 2000 LARGEST CORPORATIONS

Source: Forbes (available here).

The Mexican capitalist economy is modern, diverse, complex, productive, and very profitable. While the rate of profit on investment has declined from 46.7 percent in 1950 to 28.4 percent today, that is still somewhat higher than profits in most other nations.10 Profits make Mexican capitalists rich. Forbes reports, “The combined net worth of Mexico’s 16 billionaires increased $1.6 billion this year, from $142.9 to $144.5—or 1.12%.11

The billionaires list includes the moguls of mining, television, telecommunications, food products, consumer goods, and finance. And, while wealth is concentrated in Mexico, it is important to note that below this one percent, the billionaires of the haute bourgeoisie, are the richest 30 percent of the population, some 8.7 million families that receive 83 percent of the country’s total income.12 Two thirds of the population is poor so that one third may be quite well off. That one third votes for the PRI and the PAN who represent its interests.

Following the 2008 recession, foreign direct investment (FDI) in Mexico dropped significantly, but with the recovery in the United States, FDI again surged. Mexico received US$42.1 billion in foreign direct investment in 2013, though in 2014 the total was just US22.6 billion.13 In the second quarter of 2015, FDI rose 135 percent as $$5.42 billion entered the country.14

Foreign investors are at the moment putting billions into the auto industry in Mexico. Toyota plans to invest US$1 billion in a plant to build Corollas, while Ford plans to invest $US1.3 billion in its Chihuahua plant and US$1.2 billion in its Guanajuato transmission plant.15 Goodyear just announced that it will construct a US500 million tire plant in San Luis Potosí, while Mando of Korea has broken ground for an auto plant in Arteaga City, Coahuila.16 Daimler AG and the Renault-Nissan Alliance have also just broken ground for a US$1 billion complex in Aguascalientes.17

Notes

1 The following is a list of Mexico’s top 15 trade partners that imported the most Mexican shipments by dollar value during 2014. Also shown is each import country’s percentage share of total exports from Mexico:

1. United States: US$319,347,504,000 (80.3% of total Mexican exports).
2. Canada: $10,672,143,000 (2.7%)
3. China: $5,979,179,000 (1.5%)
4. Spain: $5,895,307,000 (1.5%)
5. Brazil: $4,739,600,000 (1.2%)
6. Colombia: $4,733,687,000 (1.2%)
7. Germany: $3,501,384,000 (0.9%)
8. India: $2,720,748,000 (0.7%)
9. Japan: $2,609,887,000 (0.7%)
10. Netherlands: $2,270,181,000 (0.6%)
11. Chile: $2,147,992,000 (0.5%)
12. South Korea: $2,027,267,000 (0.5%)
13. United Kingdom: $1,806,235,000 (0.5%)
14. Guatemala: $1,784,867,000 (0.4%)
15. Peru: $1,730,168,000 (0.4%)

2 “World GDP Ranking 2015: Data and Charts,” Knoema, available at: http://knoema.com/nwnfkne/world-gdp-ranking-2015-data-and-charts

3 “Forbes Global 2000: Mexico’s Largest Companies,” Forbes, available at:

http://www.economywatch.com/companies/forbes-list/mexico.html

4 “Top Ten Telecom Companies of the World 2013,” available at: http://www.mbaskool.com/fun-corner/top-brand-lists/7573-top-10-telecom-companies-of-the-world-2013.html

5 “Top 75 Global Cement Companies,” Global Cement, available at: http://www.globalcement.com/magazine/articles/822-top-75-globalcementcompany

6 “The World’s 25 Biggest Oil Companies,” Forbes, available at:

http://www.forbes.com/pictures/mef45glfe/not-just-the-usual-suspects-2/

7 “Several major Mexican companies among the ‘Global Challengers’,” Geo-Mexico, available at: http://geo-mexico.com/?p=8994;  Enrique Méndez and Roberto Garduño, “México, paraíso fiscal para compañías mineras canadienses, revela análisis,” La Jornada, Oct. 17, 2013, at: http://www.jornada.unam.mx/2013/10/17/politica/007n1pol. See also: Jennifer Moore and Gillian Colgrove, “Corruption, Murder and Canadian Mining in Mexico: The Case of Blackfire Exploration and the Canadian Embassy,” May, 2013, at: http://www.miningwatch.ca/files/blackfire_embassy_report_eng_0.pdf

8 Secretaría de Economía, “Companies with Mining Projects in Mexico,” http://portalweb.sgm.gob.mx/economia/en/mexico-mining/mining-companies.html;

9 Tom Barry, “,Mexico’s Three Mining Giants” at: http://www.cipamericas.org/archives/14044. See descriptions of some companies at: Mining in Mexico – Producers report record results, at” http://ravarumarknaden.se/mining-in-mexico-european-gold-centre/

10 Esteban Ezequiel Maito, “The historical transience of capital The downward trend in the rate of profit since XIX century,” available at: https://thenextrecession.files.wordpress.com/2014/04/maito-esteban-the-historical-transience-of-capital-the-downward-tren-in-the-rate-of-profit-since-xix-century.pdf

11 Dolia Estévez, “With Carlos Slim Leading The Way, Mexico’s Billionaires Have A Better Year,” available at:

http://www.forbes.com/sites/doliaestevez/2015/03/03/with-carlos-slim-leading-the-way-mexicos-billionaires-have-a-better-year/

12 Miguel del Castillo Negrete Rovira, ‘La distribución del ingreso en México,” Este Pais, April 19, 2015, available at: http://estepais.com/site/2012/la-distribucion-del-ingreso-en-mexico/

13 Anthony Harrup, “Mexico’s Foreign Direct Investment Falls in 2014,” Wall Street Journal, available at: http://www.wsj.com/articles/mexicos-foreign-direct-investment-falls-in-2014-1424798554

14 Alexander Alper and Meredith Mazzilli, “Mexico foreign direct investment rises 135 pct in Q2,” Reuters, available at: http://www.reuters.com/article/2015/08/20/mexico-fdi-idUSL1N10V1MC20150820

15 “Ford to announce $2.5bn investment,” Mexico Daily News; Toyota to invest $1B in Mexico to build Corollas,” Detroit Free Press;  “Toyota plans new factories in China and Mexico, say report,” AFP, The Guardian, April 2, 2003.

16 John Harper, “Goodyear to build $500 million tire plant in Mexico,” Cleveland.Com, available at: http://www.cleveland.com/akron/index.ssf/2015/04/goodyear_to_open_500_million_p.html; and Jung Suk-yee, “Mando Starts Auto Parts Plant in Mexico,” Business Korea, available at:  http://www.businesskorea.co.kr/article/11001/breaking-new-ground-mando-starts-auto-parts-plant-mexico

17 “Mexico Continues to Attract Big Auto Plant Projects,” Industrial Info Resources, available at: http://www.industrialinfo.com/news/

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