Downsizing the State: Privatization and the Limits of Neoliberal Reform in Mexico (review)

In the current maelstrom of debates focusing on so-called neoliberal policies and economies in Latin America, it is indeed refreshing to encounter a work that presents a fresh perspective on the often overused term. While Dag MacLeod has inserted his volume on privatization into the field of economic sociology, his methods, sources, and conclusions will interest nearly all social scientists working in Latin America. And while a clutch of recent works have evaluated the multifaceted impact and implications of neoliberal economic policies in Mexico (see Lawson 2004), few studies have tackled the rather large vocabulary of black box terms that scholars commonly employ. In this respect, Downsizing the State breaks some new ground, analyzing the privatization process for specific economic sectors in Mexico and, at times, confirming past findings on the role of international capital in the neoliberal transition (for example, Mahon 1996).

MacLeod's book is organized with equal treatment to theoretical arguments and empirical case studies. The first three chapters discuss issues of economic organization, public and state-led ownership and development of industries in Latin America, and the ultimate demise of state-led organization, respectively. While the initial review of material can, at times, seem dry for those not steeped in neoclassical economic theories and economic sociology, MacLeod does make a point of suggesting that readers skip this portion if it is not relevant to their specific interests. Still, what this implies is that the author has only lightly massaged the dissertation text on which this work is based, and it detracts slightly from the readability.

The analysis of markets embedded in social relations will appeal to economic sociologists and economists interested in the role of nonmarket institutions in relation to capital and state relations. What is more intriguing from the perspective of interdisciplinary research on neoliberal Mexico, however, are a few of the insights MacLeod draws in these initial chapters. First, a more complex and subtle analysis of the relations between public and private actors is proposed. Second, and this aspect is crucial to understanding the empirical chapters, is the focus on the privatization of the privatization process itself. In other words, the liberalization of state-led industries or sectors was not an act of state withdrawal alone, but one guided and operationalized by private interests along the way. These two important assertions are illustrated and clarified in the empirical chapters of the volume.

Chapters 4 through 6 cover the privatization of the aviation industry, telecommunications, and the national railroad system, respectively. Of central import to the author is the range of public and private decisions made to privatize each company and how the process and tactics of the Mexican federal government varied depending on the demands of varying constituents. To juggle the pressures of organized labor and international and domestic capitalists while striving to maintain a modicum of political control was the central challenge for the presidential administrations from 1982 on. What is also clear from these chapters is the pivotal role of the 1982 financial crisis. MacLeod is fair to argue that it was not a single crisis but a series of crises that either accelerated or delayed the privatization measures envisioned during each presidential term. The parallels and contrasts of the privatization processes and outcomes for the three case studies reflect the complexity of the neoliberal measures.

Long before privatization of the commercial aviation companies Aeroméxico and Mexicana de Aviación, the federal government had repeatedly kept the two airlines afloat. The irony MacLeod finds is that despite the attempt to decentralize these airlines through privatization, the net result was an increased concentration in control and ownership. The commercial aviation industry in Mexico was shaped by several accords with the United States, as both providers were forced to meet Federal Aviation Administration regulations, leading to the creation of parastate sectors that provided industry oversight and governance. Both Aerom...