How Finance Subverts Democracy

The financial class formulated their opinion of recently elected Mexican President Andrés Manuel López Obrador (Amlo) long before he took office. Their fury, thinly veiled, if at all obscured, is clear. Months before the election was held the peso began trading lower and lower with each poll that showed Amlo was likely to win. The clash between the leftist leader Amlo and the financial class was inevitable, but the transparency of the conflict has been exceptional. Flipping through the financial press you’ll read titles like “Amlo V. The Market,” “Mexico’s Democracy Test,” or “Mexico’s Leftist Chief Unnerves Investors.” These have been followed with precipitous drops in the Mexican stock market, a volatile and trending down peso, and in October the Bank of Mexico reported that $2.2 billion worth of government bonds have been released. The ongoing skirmish delineates the contradictory relationship between capital and democracy and exposes for us the typically obscured tactics that capitalists use to subvert democracy.        

While Amlo’s rhetoric agitated capital enough his recently minted “people’s polls,” transformed their agitation into rage. The “people’s polls” drag questions of economics out from closed meetings between government representatives and wealthy investors and bring these questions directly to the people. The first of these polls was on an ongoing $13 billion project to build a new airport servicing Mexico City or to simply refurbish the existing one. Overwhelmingly the people voted to reverse the plan with 69.5% of those polled voting against the new airport. The investors who had already taken out bonds on the project and were promised future profits were livid.  

The financial community has complained of a process that was ‘rigged’ against them and though the government has offered to refund bonds that were sold on the airport the offers have been rebuffed, as they seek higher remuneration than the government offers them. The complaint of course, from the rich, is not of a criticism that the polls were not comprehensive enough, but that they happened at all. For how long have the people been forced to watch as deals are cut without their consent. For the capitalists, democracy is grand, until it threatens their complete control over the resources, assets, and finances of a country.  

Amlo has already committed to additional polls on important economic questions, and it is likely that this tactic will be frequently used to empower him as he challenges the exploitative relationship between the capital and the Mexican people.

Especially over the past decade, the neoliberal consensus of forced austerity created an attractive climate for the rich to extract value from the Mexican people, the government, and most perniciously indigenous peoples. As a source of cheap labor and extensive natural wealth Mexico was regarded as one of the most attractive of the emerging markets. Publicly owned oil reserves were auctioned off offering significant private profits for the few. Amlo’s commitment to place a 3-year moratorium on these sales was met with widespread anger from investors and market analysts. Of course, oil is not the only good that is coveted. A member of Amlo’s party introduced a new bill to the Mexican Senate that required consent from indigenous peoples before new mining concessions would be approved was met with similar outrage. In the words of the Financial Times, the bill was “a move that could slow down projects or make them more costly.”    

Amlo’s insistence on expanding democracy into the questions of capital and finance has been punished. Capital flight, falling stock, and the falling peso are only the first chapter in this conflict, the rich have money levers that they can pull to influence policy and politics. But the rich don’t even give us the courtesy of silently undermining democracy. They act as if they are defending democracy, take this passage from the same FT piece on Amlo:    

“Unimpeded political power in a country with weak institutions and huge popularity appears to have convinced the veteran politician that the markets, seen by many as a potential check on his power, should also be subservient to his will.”

How contemptuous! The markets “subservient to HIS will” as if the markets must be above the decisions of the people, a people I will add, where 44% live in poverty. Is it not the other way around? The markets desire Amlo and the Mexican people be subservient to their will. Down with this cheap attempt to hide their responsibility for the misery of the people; a misery of people who for too long have been stepped on by the greed of the rich and global financiers. The same capitalists always claiming they are working to fix society, to improve society, and everywhere leave the people poorer while making themselves richer. The society faced the ravages of neoliberalism and the Washington Consensus and now in its reaction against this system that created its woes, it is shamed for standing up to itself. Now these capitalists who didn’t mind the rampant corruption as long as it flowed into their pockets, now beat their chest in defense of norms and democracy.

It would be a mistake to conceptualize the bourgeoisie as unified. National bourgeoisie compete with the international bourgeoisie for control over the same resources. The particular case of Mexico it is not unreasonable to expect a section of the national bourgeoisie to align themselves with Amlo against foreign capitalists. Already some members of the capitalist class are positioning themselves to benefit from a Mexican economy intentionally ravaged through this conflict. Here we will see the limits of Amlo’s movement, though we should support the struggle against the unchecked power of financial capital.    

In the coming months, we will hear many stories about the dictatorship and authoritarian in Mexico, our sleepwalking press will gladly reprint and echo the sentiments of the financiers and those concerned with the “Mexican issue,” but pay them no mind.

Now there are ways that Amlo can push back against a capital strike, as the recent events are not direct changes in production within the Mexican economy, just the fluttering over the attempts to capture the profits. A clever economic policy can insulate the Mexican people from the worst assaults, but this will take boldness and a commitment to effectively suppressing the power of capital and addressing the property question more broadly. Whether or not Amlo and his movement desire this is uncertain.  

Economic strangulation is an effective way for the rich to impose their will on the many, not least because the methods they take are hidden but many incorrectly see the economy as neutral. Don’t forget the bank and ATMs shutdowns across Greece as the referendum against further austerity approached. The threat was clear and despite the heroic commitment of the people to vote OXI (no) to the outrageous EU demands the SYRIZA government still capitulated.  

The warnings about economic catastrophe has already begun, from the financial to press to the norms loving John Oliver. What they mean by economic catastrophe is not a change in production in Mexico or even its fundamentals. What they mean is that Amlo is not following the global consensus that has allowed the wealthy to pillage the natural and economic resources of Mexico, with no democratic check or input. It is clear that the people of Mexico do not want the unchecked power of the rich to continue. But instead reading the financial press, you hear stories of the birth of a dictator rising. But who really is the dictator, the elected representative of the people, or the owners of capital who demand their will be done regardless of the human cost and the cries of the people?

Engels was correct in his analysis that in democracy “wealth exercises its power indirectly, but all the more surely,” in this chapter, this indirect is brought to the surface for us to see, recoil at its hideousness. We should not mischaracterize Amlo. The fight against the financial interests is important but until its power in society is completely eradicated, any project will be exposed to their wrath. Without revolutionary commitment to placing power directly into the hand of the working class, all reformist governments will be unable to deliver what they promise. But in the struggle, we achieve victories, test our strength, and lay the foundation for the future.