The Inequality Between Welfare and Neoliberalism. Interview with Rolando Cordera

Rolando Cordera and Dolores González Casanova
Picture:Arturo Orta

UNAM Internacional: Rolando, in 2017 you began producing the different volumes of the series Informe del Desarrollo en México (Report of the Development in Mexico) [see box in p. XX]. Trump’s first government was near, but we didn’t know what was coming yet. In Mexico and almost the whole continent, we still lived in the weather of neoliberalism.
Rolando Cordera: In almost the whole world.

UI: What has happened in these eight years? How have we developed?
RC: There is a very interesting book by a political scientist from Warwick University—a very good English university—, Colin Crouch, called The Strange Non-Death of Neoliberalism (2012). He is a very ironic man, very sarcastic, but a talented analyst. What he proposes is that the battery got it wrong, because the enemy was never the market, it was the multinationals, the ones who sponsor, foster and organizer the markets. And when some markets don’t work, they change them and move on, as they have a great translational capacity. This is worth thinking about, for example, now that “neoliberalism is dead”, but no: neoliberalism as a doctrine is not dead.

It is a doctrine that very wise people cultivated since the beginning of the 20^th century, and they continued to cultivate its beliefs later—it is largely about beliefs, after all—, generating very attractive doctrines, lobbying very powerful business groups, particularly in the United Kingdom and the United States, and part of what neoliberalism postulates—or what we attribute to it—is something that is part of human life and modern life in particular. That is, let’s imagine what we would do without a market. It became very painfully clear that top-down leadership, supposedly enlightened, developed and ended with the fall of the Soviet Union, that total, unquestionable form of managing economies, does not work and leads them to regrettable, aggressive situations, a real waste of human effort, as happened with the Soviet Union.

I believe we should start by assuming that the evils are not in the market. The evils are in us, who place full trust in the “wisdom of the markets,” which represents the reification of a system, a mechanism that helps us allocate resources in the best possible way, and even stimulates significant progress in economic and social organization and production through competition, as we are experiencing in these years of great technological transformation. What we cannot do is either place full trust in the markets or fully distrust them. We need to chart paths, halfway into the 21^st century, of organization or reorganization of contemporary political economies as mixed economies.

This was established by the greatest economist of the 20^th century, John Maynard Keynes: the capacity of states to intervene, to modulate demand, its excesses or deficiencies, to modulate our ambitions. Keynes says at one point: to advance in the construction of societies where the fundamental is secured, yes, what we call the welfare state and which had been considered since the late 19^th century, when the social democrats and also the Christian democrats began to see that economies did not work, that they generated unemployment, and then inflation, leading to catastrophic crises with the worst imaginable human reactions condensed in fascism and Nazism.

John Maynard Keynes  the famous economist pictured at his home in London
Fotografía: Bettman

All of this meant a very bloody learning experience. Millions dead and massive losses of physical capital. Once the Allies triumphed, a kind of great historical slogan began to be promoted, cultivated by Keynes—but also by U.S. President Roosevelt: that this must not happen again; let’s organize the world so that this does not happen again.

The Keynesian formula was adopted by a wide variety of governments of very different kinds. As someone jokingly said, “we are all Keynesians.” That was the great lesson of the catastrophes of the first half of the 20^th century. For the economy, it was summed up in that joke: we are all Keynesians. What did that mean? That we need to have the capacity to intervene in this strange apparatus we call the economy; to modulate it, to prevent its excesses as much as we can, and to gradually create the foundations for new forms of public intervention in states, in well-established democracies, with conditions that allow for genuine welfare states and societies.

That is we did the rest of the 20^th century, until formulas started failing and the  neoliberals showed great shrewdness and political skill… paradoxically, since they hated politics. But if someone did politics, it was the neoliberals, who took over complete elites in the United Kingdom with Margaret Thatcher y in the United States with Reagan. And thus, the doctrine, the commandment, spread around the world.

The solution was deregulation. The problem is not the market, the problem is the state, the source of all evils, and in technical terms, you must deregulate as much as possible and reduce the state to its minimum. That was the main slogan at a time when things were not going well, the economy was not functioning, and this great intellectual push came, so to speak, which translated into different forms of neoliberalism.

President Clinton proclaimed himself a new-liberal, a new kind of liberal, and adopted a good part of the neoliberal playbook, but today we could hardly consider Clinton a neoliberal; labels no longer serve. We, amid a very severe crisis, with very serious social implications, with high unemployment and impoverishment of workers and non-workers alike, could not find, as a community or as a government, solutions to this crisis that did nothing but hit us and repeat itself. The economy collapsed, it is said, due to serious management errors, and those who in one way or another opposed or doubted the effectiveness of the Keynesian formula of mixed economy and welfare state, presented their theses, which led us to a transformation of internal economic structures, a reduction of the state that did not reach its limits, did not reach extremes, but was very significant. Then came the proposal to build a free trade agreement with the United States and Canada, proposed by Mexico. What did that mean? Accepting the importance, the predominance of the market, but thinking of a market much larger than the one we had. This free trade zone offered a stagnant economy like ours the possibility of recovering and taking advantage of the opportunities of a capitalist economy, predominantly private enterprises, although in our case, with some significant state presence, especially in the energy sector, and certain support in the primary economy, agriculture, and forestry. But the attention of the leaders of these governments and business elites was focused on the possibility of accessing a new form of open economy, on international competition, ready to take advantage of the capital flows that obtained the greatest freedom imaginable.

THE  NEOLIBERALS SHOWED GREAT SHREWDNESS AND POLITICAL SKILL… PARADOXICALLY, SINCE THEY HATED POLITICS

UI: There was extensive talk of the investment opportunities that Mexico offered to foreign capital…
RC: Well, this is talked about a lot nowadays. It continues to be talked about a lot. The truth is that this “miracle” achieved a positive productive combination for the country, combining economic growth with increased employment, and some redistribution of public resources to the most vulnerable. But we see that employment is still half formal and half informal; that’s the toughest test, which, by the way, the current government does not address. I hope they do, because it is one of the key issues: a transformed, modern, globally open economy that has fifty percent of its workers in informal conditions, which means vulnerability, lack of protection, and no access to social insurance or public healthcare in general.

Back in the 1950s, American sociologists and economists talked about the dual society and economy of Mexicans. On one hand, industry was emerging, the country was being paved, it was the era of shared U.S. and Mexican investment—albeit subordinate; that was the “Mexican miracle”: we were able to grow without inflation or with very low inflation. That was in the fifties, sixties, and seventies. In the eighties, the dominance of neoliberalism in public ideas and state management came about when part of our political, economic, and financial leadership decreed that the miracle was no longer, that the model no longer worked, and that it needed to be changed. It was never debated; President De la Madrid mentioned it when he spoke about the need to prevent the country from slipping through our hands. But De la Madrid didn’t change anything; he struggled, as he said, with this dreadful mixture of inflation and deflation, of inflation and stagnation, which was the starting point of modern Mexican impoverishment. Who bears the weight of impoverishment? It is not the traditional peasants; it is the urban workers—that’s the difference. Those workers who are left unemployed by crises or who are not employed due to lack of growth must survive, right? So, they turn to the informal sector as a rational act of survival.

But Mexican society has shown remarkable resilience, a great capacity for adaptation and resistance. And for a while, the North—in the United States—offered some relief through industrial and agro-industrial production. We migrated as we rarely have in our history.

UI: The concept of welfare has reappeared; it is once again “in fashion” in the documents and policies of the Mexican government. Is it the same welfare that Keynes talked about back in those days?
RC: I don’t think so. For the economists of those times, welfare was translated into policies and state positions. Lord Beveridge said in the 1940s that a system had to be created to protect all of us, from the cradle to the grave. Beveridge’s phrase was the emblem of the English welfare state at a time when the big concern was, on one hand, those coming back from the war, who could not be left like that; they had saved humanity, and the issue of employment was very important.

In England, we can say the first big step taken by the welfare state was the National Health Service, which became extraordinary and was studied by many countries. Then came Thatcher and got rid of it, though not completely. That’s very interesting: there was a vote to eliminate the National Health Service during Thatcher’s time, and it lost.

The neoliberalism that is taking hold in Mexico is different, in some ways, from the European one. Although it has the same foundations, its impact is different because in Europe the welfare state, support for health, and education are maintained to a certain extent. Germany, France, the United Kingdom, Denmark, and even Italy, in their own ways, are all countries that have maintained certain levels of protection and even social promotion. It is the welfare state that began to be conceived many years ago, in the 19^th century. Interestingly, one of the first to act with this perspective—but also with a perspective of containing the “bad” enemy: the socialists—was Bismarck, the “Iron Chancellor.” He established social insurance in Germany.

The one who created unemployment insurance for England was Lloyd George, a quintessential liberal. At the time, it was seen as a strategic decision, but also as a way to manage the reality that the great promise of the Industrial Revolution did not result in the well-being of most people, but rather in their impoverishment. This was a challenge faced by the liberals, and thus in England, laws were implemented early to protect the poor. They were also aware of the threat posed by socialist thought, with a deep critique of the economic organization that was being created because of the Industrial Revolution.

It is like what we began to experience nowadays with the great promise of globalization, from which a new order was supposed to emerge. President Bush promised that the markets would be endless because people would be free to move and because there would be democratic-liberal regimes and protection of human rights around the world, in the context of the struggle for global leadership during the Cold War, when the USSR and other communist countries were persistently attacked on the grounds that human rights were not being respected.

The United States claimed the banner of human rights defender, and, with the Cold War over—the Soviet empire devastated—, brought back the issue of human rights linked to the defense of liberal democracy, insisting that this initial transformation of the global economy would lead to new, more productive, more promising economies.

THE STATE NEEDS TO RECOVER ITS PROMOTION, ARTICULATION AND INVESTMENT CAPACITY; THIS MEANS THAT THERE MUST BE A FINANCIALLY POWERFUL STATE, AND THERE ISN’T

UI: At the launch of the  Informe del desarrollo en México (Report of the Development in Mexico) series, you outlined three scenarios: one was the trend scenario (continuing as we had in the 1980s); another was the trend scenario with stability (implementing certain policies that would prevent the economies from falling into crisis again); and a third, the optimistic scenario. Which of these are we experiencing almost twenty years later?
RC: I believe that we are suffering, especially in Mexico, from the trend of stability. We still have a lot of work to do, a lot of effort. What we can confirm today is that, after so many years of no growth, of no serious transformation of the state, we do not have the means to substantiate optimism. A huge effort is needed to have a state capable of promoting the rest of society, of increasing economic growth, which cannot happen without a sustained increase in investment… UI: Public?
RC: Public and private and alien… Without investment there can be no growth. That is what the founders said, what Keynes said and we now say. The state needs to recover its promotion, articulation and investment capacity; this means that there must be a financially powerful state, and there isn’t. We insist on a fiscal reform that is tax-based, and even on taking a step in a direction we lost along the way: we must have a state that promotes, coordinates, and regulates. Institutions are institutions of programming, planning, and regulation. This way, we would have a modern state, up to the task of the major challenges of recovery and growth. Then we could ambitiously but sensibly address the issue of development—everyone has their own definition—, which is growth with well-being, that is, growth with social equity, without poverty, without inequality. And what do we mean by this? Access to health, to education, to sustainable development; reducing income gaps, reducing fiscal gaps. However, it seems that we are going in the opposite direction: poverty is being reproduced within families; if there is no economic growth, after a certain time what exists is the reproduction of poverty.

UI: When we talk about regional inequalities, there are municipalities in the country where that gap has been overcome, and others where it hasn’t. What strategies have they followed to achieve this reduction in the gaps?
RC: I believe that the number one goal will have to continue being economic growth, as a sine qua non condition for thinking about a better distribution of what we call the fruits of growth. More employment can then lead to more education, access to services, more capacity to be in the market, to compete without being informal. But even informality cannot be mitigated if the economy does not grow. People will rationally say, “As long as there’s no certainty, I’ll go to my stand on the corner and with that we can survive, because my wife works as a domestic worker and my son is now receiving the welfare scholarship; with that we manage.” But we know that is not the case, because in the case of any eventuality—health-wise, for example, let’s say a catastrophic illness—they fall to the bottom. UI: Like what is happening to the poorer classes in the United States, who do not have access to healthcare.
RC: That’s why there’s the obvious paradox that one of Trump’s main supporters are the poor, those on whom global structural change has generated a kind of resentment towards the Democrats. In addition, this is blends with the return of authoritarian, discriminatory ideologies.

UI: What we call neofascism?
RC: Yes, but without the neo. There is a trend in the world that we could call authoritarian; I don’t know if it will turn into proper fascism. It could lead to authoritarian forms that imagine a new institutional framework, that carry out a revolution as Mussolini envisioned. And they did it, they destroyed Italy, but they carried out the revolution. If Trump is thinking along those lines too, we are in danger. But I have reservations about saying that fascism is coming.

UI: Then, eight years after publishing the first Informe del Desarrollo (Report on Development), have there been significant changes? What would they be?
RC: A part of the Mexican territory has transformed, and we can see it if we travel through the north. Not just Tijuana and Juárez, there are many other places where industrialization has taken off; a powerful automotive industry in Ramos Arispe and in Hermosillo (citing from memory), a transformation of the entire region from Tijuana to Tecate. It’s spectacular; some time ago I was around there and saw factories hiring people under tents… That has cultural implications. How much can we talk about that transformation in cultural and political attitude terms? I don’t know, I think we wouldn’t do very well today…

UI: It comes to mind that this region, the northern border, is also experiencing issues related to drug-trafficking economies, with unexpected violence, at an almost military level. How much can these economic transformations compete with this real threat posed by drug trafficking?
RC: It is a very powerful force, with a great firepower because it has a great purchasing capacity. We are seeing something unusual in Culiacán, the capital of a prosperous state, which has been stagnant for a year, taken over.

How much does that allow us to talk about transformation? Let’s study it. We need to see what happens with young migrants. Does this transformation create acceptable, dignified ways of life? Many of the criteria we use to study and discuss poverty and inequality have been modified.

Formally, almost without knowing each other, we started talking about this at the beginning of the 21st century, with Fernando Cortés, Mario Luis Fuentes, Enrique Provencio, and many other people. We addressed the Mexican social issue produced by crises, transformations, and growth. Those initial transformations led to bursts of welfare state and to the great crisis of ’29 and the war. The Nazis reached the formalization of another capitalism, which can end and then be reborn, because capitalism is very stubborn, resilient, enduring; it is the most enduring system in history, but it is very easy to divert it toward inequality, toward concentration. Think of Pinochet: he carried out the coup under conditions that the middle classes already considered unacceptable disorder, and within two or three years he brings in the sadly named “Chicago Boys,” a group of economists from the Catholic University who had studied in Chicago, and they undertake the first major experiment of neoliberalism soaked in blood and fire, under a military dictatorship that systematically violated human rights.

UI: Finally, what is the role of public university in the situation the country is facing? Is the state listening to us as a university?
RC: Well, the government has shown that we don’t really catch its attention. Although the president has insisted that the government is supportive of UNAM… I believe that our main task and mission remain to build and rebuild ourselves as a voice for society. That means we must be demanding of ourselves regarding the issues to study, the topics to address, and the ways of communicating with the rest of society. For example, we have a group that we formed in the heat of the big crisis of 2008-2009, because there was a lot of discussion and everything was organized by Congress. But, as often happens, the Secretary of Finance told us, “It’s all good, but I’m the one in charge.”

We were a bit frustrated because there was a lot of work to be done to seriously move towards a change in economic policy direction, which was what needed to be done and what had been done in many parts of the world. Here, it was done, but very little. That’s why we did so badly; that crisis hit us hard. There was renewed impoverishment, inequality deepened. And we formed this group called the New Development Course Group, with support from then Rector Narro. We began to meet in a room provided by the University Council and started discussing many topics; we wrote several books. One of the things we all noticed was the amount of talent accumulated in this university and, if you look for it, in other universities as well. The Mexican university, against all odds, has grown, expanded, and populated parts of the country. UNAM itself: we have National Schools of Higher Studies in León, Mérida, Morelia, Oaxaca.

That is Mexican talent and wealth. Knowledge production. It is the capacity, above all, to acquire new knowledge. Where I think we are failing—don’t get mad at me—is in dissemination; we haven’t found the right tone from the university to talk about all of this. But we do talk, that’s for sure. We never stop talking.

---