Democratization Without Representation: The Politics of Small Industry in Mexico (review)

Mexico's woefully inadequate job creation record since the debt crisis of the 1980s has been well documented in the Latin American economic development literature. It was supposed to change with the implementation of market-based, outward-oriented reforms during the decade of the 1990s, epitomized by the passage and implementation of the North American Free Trade Agreement in 1994. Yet as the country entered the twenty-first century, its underemployment rate, the percentage of the economically active population that is unemployed or employed for less than 35 hours per week, stood at 21 percent in 2001, unchanged from the rate recorded in 1990.

Several investigators, including noted Mexican economists Enrique Dussel Peters and José Luis Calvo, have argued persuasively that in order to confront effectively Mexico's employment problem, small, labor-intensive firms must play a decisive role in generating jobs to absorb the estimated 1.2 million to 1.5 million new entrants in the labor force each year. By and large, these labor-intensive firms figure prominently in the country's internal (domestic) market, as opposed to their larger, more capital-intensive counterparts and foreign associates in the tradable sector. Yet it is Mexico's internal market that has been hard-hit by the country's dramatic and indiscriminate opening to world markets, as well as by the harsh, IMF-sponsored stabilization and adjustment policies adopted by the Mexican government since the onset of the debt crisis, most recently following the 1994–95 peso crisis.

In view of the strategic importance of this sector, which accounts for more than half of manufacturing employment, Kenneth Shadlen has prepared a timely, well-researched, and well-written book that addresses the major underlying political and economic reasons for the lack of effective representation of small and medium-sized firms in key decisions affecting Mexico's market-based, outward-oriented development strategy. Ironically, the book's main contention is that small firms' capacity to participate in policymaking diminished significantly as the country was undergoing a process of economic liberalization and democratization during the 1980s and 1990s, culminating with the election of National Action Party (PAN) presidential candidate Vicente Fox in 2000. Indeed, Shadlen contends that the National Chamber of Manufacturing Industry (CANACINTRA), the country's most important small business association, had more effective representation and access to the all-powerful executive under the authoritarian Institutional Revolutionary Party (PRI)-dominated governments of the 1950s, 1960s, and 1970s than under the neoliberal, and arguably more democratic, regimes of the 1990s.

To some extent, Shadlen's thesis is similar to that advanced by Kurt Weyland in his thought-provoking paper, "Neoliberalism and Democracy in Latin America: A Mixed Record" (2004). Weyland argues that the pursuit of neoliberal reforms has been a mixed blessing for Latin American countries because it has ensured the survival of democracy, but only at the cost of limiting its quality. That is, intermediary institutions, such as small business organizations, professional associations, and unions have been weakened and divided by painful stabilization and market-based reforms, rather than reformed and strengthened so that they can become effective vehicles of representation for their members.

Shadlen's analysis in this relatively short book is based on extensive work at the National Archives in Mexico City and numerous open-ended interviews with small business entrepreneurs and leaders of small business organizations such as CANACINTRA, not to mention leaders of the country's three major political parties. After a brief introduction, orientation, and discussion of the methodology in chapter 1, chapters 2 through 5, corresponding to crucial periods in Mexico's modern history (post-1940), examine how the country's changing economic strategies and fortunes, political and institutional developments helped both to create and to foreclose opportunities for effective representation for small and medium-sized businesses. The last chapter addresses the important question of whether the lessons of the Mexican case, insofar...