Privatization and Political Change in Mexico.

• Author: Araujo, Karen LaFollette

By Judith Teichman Pittsburgh: Pittsburgh University Press, 1996. Pp. xiv, 291. $54.00.

As an author keenly aware of the time, effort, and personal sacrifice that go into the writing of a scholarly book, I am predisposed to review favorably the work of a fellow researcher of Latin America, particularly one who combines Spanish language expertise with an admirable ability to elicit honest responses from Mexican officials. Nonetheless, I find much to criticize in Judith Teichman's Privatization and Political Change in Mexico, beginning with its main thesis that privatization in Mexico has increased the authoritarian nature of the government and is not fostering political democratization.

First the positive. The author accurately portrays how pre-reform Mexico functioned. Teichman is at her best when discussing strictly "political science" topics (her economics is more like diluted Marxism). She depicts the origins of Mexico's statist development model in the Constitution of 1917, which established the state's ownership of all lakes, principal rivers, and subsurface minerals and water, as well as the state's right to dispose of private property in the public interest--that is, essentially as government officials see fit. As in many other countries, the Great Depression was a catalyst for increased government intervention in the economy. Beginning in the 1930s Mexico accelerated its nationalization of foreign companies in the petroleum, railroad, and mining sectors and instituted more protectionist measures.

By 1982 there were 1,155 state enterprises, including huge conglomerates such as Petroleos Mexicanos (Pemex) in the oil sector, the Federal Commission of Electricity (CFE) in electrical energy production, Ferronales in the railroad industry, and Sicartsa in the steel industry The government owned and operated many mining firms, two airlines, eighteen banks, hotels, even jewelry stores and a bicycle factory. The state development bank, Nafinsa, provided the wherewithal to build the state-run system as it bought out private firms, took over bankrupt private firms, and bought shares in nationalized enterprises.

Teichman observes that state companies were created to serve social and political as well as economic objectives. The Mexican government rescued uneconomic mines, for example, to preserve jobs, and it expanded employment in the public sector to provide patronage to political supporters.

Teichman describes how the state firms became...