Banks Versus Labor and the Poor

What the state failed to accomplish in its political struggle with labor, the banking community achieved with its collective control of capital flows. The state's austerity program was limited by its historical political relations and process of struggle with the labor force. The international financial community had no such constraints and was in a stronger position than the state to impose an IMF austerity program that was far more disadvantageous to labor. This program included the strict curtailment of imports, further reductions in social welfare expenditures, and significant decreases in wages. Despite labor's intense opposition, the banks'

collective position remained implacable. There would be no renegotiation of Mexico's debt without compliance with the IMF's austerity program.

Through these various levels of class struggle over Mexico's foreign debt crisis in 1982, the structurally unified international banking community intruded into Mexico's domestic affairs. The subsidies of food staples and gasoline, nationalization of some industries, rising wages, and increasing jobs that labor had won from the state were all possible because of the availability of finance capital. Later, however, the international banking community, backed by the IMF, turned back those policies and shifted the political economy to a free-market orientation that assigned a large proportion of the GNP to debt servicing. Thus the servicing of debt and the austerity program compromised the Mexican state's relative autonomy in mediating and managing its own affairs. The debt crisis and subsequent austerity program successfully turned back the clock on class struggle so that labor would later have to struggle once again for gains it had previously won and now lost.