Prologue to Luis de la Calle: From the Economic and Equality Deficit to the Democratic Deficit

Prologue to Luis de la Calle:
From the Economic and Equality Deficit to the Democratic Deficit*


 The world can appear static at times, but looking back, there is an ongoing process of change that transforms civilizations in the long run. Some say these changes occur every twenty years, an arbitrary period that nevertheless reflects natural generational renovation. The 20th century is a clear example of it: in the year 1900, Europe’s unmatched wealth and prosperity brought to mind the permanence of the moment; by 1920, however, the continent was coming out of a bloody war that would supposedly “end all wars” and yet had resulted in tens of millions of casualties and a defeated, impoverished Germany.

By 1940, the world was at war once again, this time with Germany dominating the European continent in what many believed would be the new normal. By 1960, Germany had been divided and the United States and the Soviet Union were halfway through the Cold War. By 1980, the United States had been defeated in Vietnam and was now aligned with China against the USSR. By 2000, the USSR, which had once seemed an unbeatable enemy, had disappeared, and by 2020 we are now facing an entirely new international reality.

China and the United States are engaged in geopolitical confrontation, complicated by the scaffolding of economic (and other) links forged during the past few decades. The only constant is constant change, much of it inspired by ideas that become increasingly or decreasingly relevant as time passes.

Mexico is not exempt from generational and geopolitical change, for the same reasons as the rest of the world: the context changes in ways that affect Mexicans and internal decisions, both right and wrong, shape the country’s fate. The Mexican economy has therefore undergone important changes that have opened some doors and closed others. The subject of whether the open economic model, which has been the norm since the end of World War II, is sustainable is currently being debated worldwide. It is no longer a matter of socialism vs. capitalism, as it was during the Cold War, but of which kind of capitalism —authoritarian vs. democratic—is best suited to the needs of the different nations. China’s success in generating high economic growth rates and solving essential infrastructure problems is attractive to many, including influential actors in Western capitalist nations, who see democratic decision processes as a hindrance to development. At the same time, the costs of China’s authoritarian model become equally apparent, as the country’s decision-making regarding the pandemic illustrate. Democracy comes at a cost, but its benefits are irreplaceable.

Additionally, the difficulties Mexico has faced in setting the course for its own development have brought up a very clear discussion in ideological terms, but not very precise regarding the factors in dispute and, especially, regarding the consequences of whatever the country decides for its future. The election of President López Obrador two years ago evidenced open and underlying tensions and conflicts that had been festering and are now the subject of everyday discussion, although they have been at the heart of the national debate for fifty years: how to achieve integral development and make Mexico a developed, successful and civilized country.

In this text, which COMEXI is honored to publish, Luis de la Calle persuasively explains the nature of the dilemmas the country faces, and the contradictions that become apparent in the debate, especially regarding delicate subjects such as growth, corruption and the market in general. His conclusion is one that politicians and economists have been avoiding for a long time: the country’s economic problems are in fact political, and they have more to do with the lack of democracy than with the alleged shortcomings of the economic model.

The ongoing debate in Mexico, though often shrouded, is no different from that of the rest of the world, and at its heart lies the Keynesian spirit that ideas shape the course of history: “The ideas…”, said Keynes, “…both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else”. Wrong ideas come at a high price: this is Luis de la Calle’s central argument. It is a significant debate whose outcome will determine the success or the failure of Mexico as a country, a circumstance that is magnified by the outbreak of the coronavirus crisis given the recession it entails. Whatever Mexico decides to do will allow it to either walk out of this triumphantly or become stagnated once again.

 Luis Rubio
Chairman, COMEXI