Power and Wealth

Luis Rubio

The great success of capitalism   has been the generation of wealth and prosperity for billions of global inhabitants and at the heart of that system of economic organization lies a crucial concept:  the separation of political power from wealth. Although capitalism and democracy, with all their tensions, advanced by means of distinct conduits over time, their convergence has been the highest transformer of the history of the world.

The tension between capitalism and democracy is natural and inevitable, but it diminishes or increases according to the circumstances. In concept, the distinction between them is logical: capitalism is a system of organization that makes possible the participation of economic agents in the process of the creation of the goods and services that the population demands. For its part, democracy, at least in its modern version, is exercised through popular representatives who are elected   and who procure the satisfaction of their voters and simultaneously advance the interests of their country.

Democracy and capitalism complement each other and function by way of a critical  linchpin: the Rule of Law, which institutes the rules of the game,  the limits to action, respectively, of the government and of the private citizens. In a perfect world, the tension between the two ambits -the political and the economic- generates opportunities for growth and development. In like fashion, during moments of difficulties or of divergence between both spaces, crisis situations are produced.

Those moments of crisis bring about excesses and abuses that are propitious circumstances for the establishment of tyrannical governments.

At his arrival to the presidency, López Obrador insisted on his conviction that economic decisions should subordinate themselves to the political power. The President was correct, except that his remark ignored that crucial linchpin: the nodal function of the law, and everything underlying it in terms of the protection of the rights of the citizens, for the country to be able to work.  In contrast with the central principle of prosperity, which separates power from wealth (while considering both equal), the presidential approach derives from the principle of subordination. Instead of clear, transparent and general rules, the government seeks special arrangements for each case, as happened with Tesla and Constellation Brands. No one should be surprised by the lethargy that the country is experiencing because of that way of governing.

The use of the verb subordinate is revealing because it implies submission, subjugation and humiliation. That is, the objective is not that of procuring the best balance between the economy and politics, but instead the control of one over the other. This is not a new problem in Mexico’s history: from the end of the revolutionary joust, the country has undergone permanent ups and downs, typically marked by moments of crisis that obligate the correction of the previously earmarked course. That pendular nature of functioning  of Mexican politics over time has cost enormous opportunities for development and  generated an interminable propensity toward thinking in the short term.

The politicians, impeded from attending to the citizens because that is not fruitful for them in any way, bend over backward to be at the service of the powerful one at the palace because therein lies the opportunity for their next job. Despite there evidently being great professional politicians in the country, none of them devote themselves to building a career founded on specialization, as occurs in the world’s successful democracies. That lack of specialization facilitates presidential control above all the political world, in that it makes impossible the consolidation of effective and permanent counterweights, a key factor for economic progress.

On their part, the entrepreneurs see themselves as obliged to think in terms of presidential cycles because they never know what occurrence will guide the next owner of the presidential ball. Historically, the economy followed a six-year cycle because everything depended on the mood of the governor-in-turn.

The North-American Free Trade Agreement (NAFTA) introduced a new dynamic into the Mexican economy in that it created sort or a watertight compartment that favored long-term investments on establishing clear and guaranteed game rules by an internationally recognized regime. Beyond the (huge) errors that hindered the conversion of the entire country into NAFTA territory, it is not by chance that the only part of the economy that continues to prosper is the one associated with that legal regime, today much more vulnerable than at the moment of NAFTA’s conception due to its renegotiation into the Mexico–United States–Canada Agreement (USMCA).

NAFTA’s chief political achievement was precisely that it made possible, for the first time since the Revolution, the separation between power and the generation of wealth. The greatest cost that AMLO (with the help of Trump) will have infringed upon the country consists of his having brought back to daily life, political control and the subordination of the productive sector. Rather than extending NAFTA’s “reign” to generalize the separation between the political power and the entrepreneurial world, he rolled the country back to its worst moments and vices.

At the dawning of the presidential succession, it is time to begin to reflect on the costs of a paleolithic administration in the era of informatics and what that implies for the magnitude of the correction that will have to take place if a generalized collapse is to be avoided.